Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair

PETITION

Stansted Airport

Mr. Kirk: With your permission, Mr. Speaker, and that of the House, I beg to ask leave to present a Petition from the. Borough Council of Saffron Walden in the County of Essex concerning the decision of Her Majesty's Government to site the third London airport at Stansted.
The Petition sets out that this decision was taken
…"notwithstanding the advice and findings of the Inspector appointed by Her Majesty's Government to hold a public local inquiry into local objections to the proposed development of land at Stansted and the weight of local and national opinion against the proposal.
The Petition states that the carrying into effect of these intentions would result in disastrous consequences to the life of the villages in the County of Essex and asks that Her Majesty's Government
…may be called upon to examine afresh its policy far national airports, to consider other alternative sites for the third London air-

port and to refrain from granting planning permission for the development of the airport at Stansted until this has been done and a final decision can be taken in the context of an overall national airports policy.
And your Petitioners, as in duty bound, will ever Pray.
To lie upon the Table.

Oral Answers to Questions — MINISTRY OF LABOUR

Aircraft Industry (Skilled Personnel)

Mr. Corfield: asked the Minister of Labour if he will take steps to ensure that skilled personnel rendered redundant by the cancellation of orders for Buccaneer aircraft for the Royal Navy are redeployed so that their skill and experience are put to the maximum use in the interest of the Government's export drive.

The Minister of Labour (Mr. R. J. Gunter): Yes, Sir. My officers will do what they can to bring to their attention vacancies in export and other important industries.

Mr. Corfield: Can the right hon. Gentleman say whether his past experience of matters of this kind gives grounds for much optimism? Is he aware that the Americans are now proposing to fly Army trucks to South Africa, and is it not time that we reconsidered the decision about Buccaneer aircraft?

Mr. Gunter: I do not know that I am called upon to answer questions about the trucks, but our experience in the past has been that personnel have been absorbed at a fairly rapid rate. Of the skilled personnel to whom the hon. Member refers in connection with the Buccaneer, so far only 35 trained personnel have been made redundant, of whom about 23 have already been placed.

Agricultural Training Board

Mr. Wingfield Digby: asked the Minister of Labour what representations he has received from the National Farmers' Union about the Agricultural Training Board; and what reply he has sent.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): I would refer the hon. Member to the reply I gave on 14th February to the hon. Member for Norfolk, North (Mr. Hazell)—[Vol. 758, c. 1348-1350.]

Mr. Digby: While recognising that the hon. Gentleman anticipated his Answer to this Question only last Thursday, may I ask him to answer my Question?

Mr. Hattersley: My right hon. Friend has had a number of representations from the N.F.U. including the original request that the Board should be set up in the first place. The most recent suggestion came out on Thursday, when the N.F.U. suggested that a good case could be made out for a Board, but the Board had anticipated that sugestion at a meeting on the previous day by itself suggesting a joint meeting.

Mr. John Wells: asked the Minister of Labour how many farmers have failed to reply to the Agricultural Training Board's questionnaires.

Mr. Hattersley: This is a matter for the Board, but I understand that about 90 per cent. of employers have replied to the questionnaire.

Mr. John Wells: asked the Minister of Labour, in view of the many representations from farmers against the Agricultural Training Board, if he will arrange for a poll of producers into the desirability of its continuance.

Mr. Hattersley: No, Sir.

Mr. Wells: In the light of the Minister's statement last week and the need for the Board to live in harmony with the farming community if it is to succeed, will the hon. Gentleman think again about it, especially as the farming community are still upset even now?

Mr. Hattersley: I have said many times, and I welcome the opportunity to say again, that the Board can succeed only if it lives in harmony with the farming community. I hope that, as a basis for future harmony, the statement made by the Board after its meeting last week, offering to have new talks with the industry if the industry wished, will be followed up successfully.

Mr. Farr: When he is looking at the structure of the Board, will the hon. Gentleman look into the fact that there are no farmer members on the Board from the East Midlands and put that matter right?

Mr. Hattersley: The hon. Gentleman wrote to me about that, and I hoped that I had convinced him that there were, in fact, members on the Board from the East Midlands.

Mr. Farr: No.

Selective Employment Payments Act (Movement of Labour)

Mr. Ridsdale: asked the Minister of Labour what has been the percentage movement of labour between service to manufacturing industry since the passing of the Selective Employment Payments Act, 1967.

Mr. Hattersley: Provisional estimates of employees in employment in manufacturing industries in Great Britain show a decrease of about 5 per cent. between September, 1966 and January, 1968. Comparable estimates are not available for the service industries.

Mr. Ridsdale: Did not the hon. Gentleman say that this figure would be available early in 1968? Is it not quite clear now that Government policies, and particularly the S.E.T., are now enabling labour to be redeployed into productive industry, particularly as 395,000 equals the 5 per cent. about which the Minister spoke?

Mr. Hattersley: I have told the House, and perhaps I have told the hon. Gentleman, on previous occasions, that the full effect of the S.E.T. cannot yet be felt, but that our certain impression is that it is doing the job it set out to do.

Unemployment (Sunderland)

Mr. Willey: asked the Minister of Labour what is the number of persons unemployed in Sunderland and the number of unfilled vacancies at the latest available date.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. E. Fernyhough): Provisional figures show that on 12th February, 1968, 3,205 persons were registered as unemployed in the area covered by Sunderland Employment Exchange, and on 7th February, 1968, 272 notified vacancies remained unfilled

Mr. Wiley: In view of the persistently high level of unemployment in Sunderland, and our particular difficulties there, will my hon. Friend ensure that we are row considered as eligible for designation as a special area?

Mr. Fernyhough: My right hon. Friend knows that all the benefits of the Local Employment Acts and the additional benefits for the development areas are available to Sunderland, and I am hoping that what has happened in the North-East generally this last month in the Nay of new industry determining to go there will apply to Sunderland very shortly.

Mr. R. W. Elliott: Will not the Parliamentary Secretary agree that a Northern Region unemployment figure of 62,000 means that unemployment there is at a frightening level? Does he, as a north country man and Member of Parliament, recall that some of his Labour Party colleagues in 1966 claimed that Labour had cured unemployment in the region in 17 months?

Mr. Fernyhough: Of course, I am aware of the acute problem in the NorthEast—it faces me every time I go to my constituency—but I hope that the hon. Gentleman, likewise, will agree that the announcements made since Christmas

about new industry going there augurs well for the future.

Job Applicants (Personal Details)

Mr. Winnick: asked the Minister of Labour what representations he has received regarding the activities of certain organisations which are obtaining on behalf of prospective employers personal details of individuals applying for jobs; what steps he proposes to take; and if he will make a statement.

Mr. Gunter: I would refer my hon. Friend to the debate on this subject on 5th February.

Mr. Winnick: Will my right hon. Friend give the House an assurance today that he will keep a very careful watch on these rather dubious organisations which inform on prospective employees for money?

Mr. Gunter: Yes, I give that assurance and, because of my concern about certain aspects of this situation, I propose to have talks with the C.B.I.

Wages Council System

Mr. Biffen: asked the Minister of Labour if he has concluded his meetings with the Confederation of British Industry and the Trades Union Congress about the future of the Wages Council system; and if he will make a statement on the results.

Mr. Gunter: These discussions have not yet been completed.

Mr. Biffen: In view of the widespread anxiety about the thinly disguised ambitions of the National Board for Prices and Incomes to usurp the duties of the wages councils, will the right hon. Gentleman bear in mind the desirability of having these discussions speedily concluded and the views of the Government made known?

Mr. Gunter: As far as I am concerned, the speedier the better. The hon. Member will appreciate that this matter is one of very great importance to the Trades Union Congress, which has been considering it for some time. This is one of the aspects which the Royal Commission will be considering and on which I hope it will give me guidance as to how we can get rid of the difficulties more quickly.

Employment (Portsmouth)

Mr. Judd: asked the Minister of Labour what action he is taking to review the future employment position in Portsmouth; and if he will make a statement.

Mr. Fernyhough: The effect of recent redundancies and defence cuts on the future employment position in Portsmouth cannot yet be fully assessed. Since the war, Portsmouth has been markedly successful in attracting more diversified industry, and there is every reason to suppose that the Greater Portsmouth Area will continue to attract further industrial development.
My right hon. Friend the President of the Board of Trade, in considering applications for industrial development certificates, takes fully into account the level of unemployment in the area.

Mr. Judd: Would not my hon. Friend agree that the recent changes in Government defence policy and the recent closure of Hawker Siddeley in the area show that there is still too great a dependence on the defence industry? Can he give encouragement to alternative industry in Portsmouth?

Mr. Fernyhough: That encouragement is given in the sense that, even though Portsmouth is not a development area, the Board of Trade gives industrial development certificates when they are sought.

Bank Holiday Act, 1871

Mr. Arnold Shaw: asked the Minister of Labour whether he will seek to amend the Bank Holiday Act, 1871 to make it obligatory on employers to grant the six annual bank holidays or make compensatory provisions either in payment or time-off in lieu.

Mr. Hattersley: No, Sir.

Mr. Shaw: Is not my hon. Friend aware that there are many workers who are not protected by trade unions or wages councils and do not, therefore, enjoy these benefits? I submitted a case of a constituent employed by the chain of betting shops owned by the Mark Lane firm.

Mr. Hattersley: I am aware of the problem to which my hon. Friend refers.

I am aware that it operates in other cases as well, but this does not seem to be an instance in which one part of the employer's agreement should be subtracted and made subject to statutory controls.

Industrial Training

Mr. Gwilym Roberts: asked the Minister of Labour what plans he has for developing the use of programmed learning techniques for industrial training; and if he will make a statement.

Mr. Hattersley: I would refer my hon. Friend 'to the reply I gave to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) on 29th January—[Vol. 757. c. 210.]

Mr. Roberts: Would not my hon. Friend agree, however, that in view of the volume of training which has to be undertaken and the shortage of specialist training instructors in many fields, the use of programmed learning techniques has to be undertaken on a very extensive scale?

Mr. Hattersley: I certainly agree with that, but it has to be remembered that because of the social as well as the economic obligations of training centres, a rather special form of programmed learning is demanded. That is what is being investigated at the moment.

Mr. Gwilym Roberts: asked the Minister of Labour if he will circulate in the OFFICIAL REPORT figures for each industrial training board, details of the amounts raised in levies and paid out in training grants; and what steps he is taking to step up the total amount of training undertaken.

Mr. Hattersley: This information is already published in the annual reports of industrial training boards, which are laid before Parliament in accordance Section 8 of the Industrial Training Act. For the financial year ended 31st March, 1967, the total amount raised in levy was nearly£97 million and the total amount paid in grants by that time was just over£83 million. Ten million pounds was reserved for outstanding claims. The totals of both levy and grant are expected to be considerbaly higher in the current financial year. A prime purpose of the work of the training boards, including


The levy and grant system, is to encourage increased training to meet industry's needs.

Mr. Roberts: Would not my hon. Friend agree that, while the position is satisfactory as a whole, in view of the observations of the Association of Teachers in Technical Institutions he should look at what further steps could be taken to increase training? Would he not also agree that in certain industrial and service categories we can get the benefit of training only if we also have some measure of compulsion?

Mr. Hattersley: I am sure my hon. Friend is aware of the debate in which my right hon. Friend and I made statements about our attitude towards the Report to which the Association contributed. It is not our view that compulsion should he extended, but that the organisation should be able to get on with its work.

Mr. Scott: When may we expect to have a report on a training board for the printing and publishing industry?

Mr. Hattersley: That is another question.

Captain W. Elliot: asked the Minister of Labour what reduction in the previously planned budget for the Government training programme will result from the policy announced by the Government on 16th January.

Mr. Tom Boardman: asked the Minister of Labour what changes in the expansion programme for Government training centres will result during 1968 and 1969, respectively, from the latest restrictions on public expenditure.

Mr. Hattersley: No reductions are contemplated in the programme of construction of new centres. I would refer the hon. Members to the statement made by my right hon. Friend in the House on 6th February about our Government Training Centre programme.

Captain Elliot: Does not the Joint Parliamentary Secretary agree that cuts in the planned programme are to take place? Does he not agree also that it is nit skilled trained manpower that our future depends? Is it not a grave criticism of the Government's policies that they are forced to cut their training programme?

Mr. Hattersley: It would be a grave criticism if we were doing that, but, as my Answer was intended to convey, we are not.

Mr. R. Carr: Will the Parliamentary Secretary be quite specific about this? The Question is not about programmes for new centres. It is about the budget for the training programme.

Mr. Hattersley: A Question about total costs appears later on the Order Paper and I did not want to pre-empt the hon. Member who had tabled that Question.

Mr. Ridley: asked the Minister of Labour what the total budget will be for all activities in the Government training programme during 1968; and how this compares with 1967.

Mr. Lane: asked the Minister of Labour what the total expenditure of his Department on Government training centres will be during 1968; and how this compares with 1967.

Mr. Hattersley: This information is not readily available for calendar years. Net Ministry of Labour expenditure on Government training centres for the financial year 1966-67 was£6, 652, 000; for 1967-68 it is expected to be£8,760,000. The corresponding figures for all activities in the Government's training programme are£9,322,000 and£14,251,000 respectively. The estimates for the financial year 1968-69 will be placed before Parliament shortly.

Mr. Ridley: Have the hon. Gentleman's estimates for the training programme been cut in the recent series of Government cuts?

Mr. Hattersley: The estimates for next year will be an increase on last year's figure.

Mr. Lane: Will the hon. Gentleman assure us that as the programme develops, the needs of East Anglia and of the East Midlands will be borne in mind?

Mr. Hattersley: Of course, I can give that assurance. The hon. Gentleman will know from our G.T.C. programme that they are already borne in mind. Many of the needs of East Anglia and the East Midlands must be met by the industrial


training boards, not least for that geographical area by the Agricultural Horticultural and Forestry Industry Training Board.

Mr. Edwin Wainwright: Does my hon. Friend realise that, in spite of the deplorable attitude to training adopted by the Tories when they were in office, we are very dissatisfied with what is happening now? We want more and more money spent on it.

Mr. Hattersley: My hon. Friend is getting more and more money spent on it, and I hope that when he realises the magnitude of that "more and more money" he will be satisfied.

Mr. William Hamilton: asked the Minister of Labour if he will publish in the OFFICIAL REPORT a table showing the number of Government training centres, the number of places available, the number of trainees in training, and the total number who had completed training, in

VOCATIONAL TRAINING SCHEME, SCOTLAND


Date
Number of Government Training Centers 
Available Places 
Number in Training 
Number Completing Training During Year


December, 1952
…
1
292
189
319


December, 1963
…
3
347
279
167


December, 1966
…
7
905
779
1,147


December, 1967
…
8
1,093
936
1,506


December, 1968 (estimate)
…
9
1,377
1,170
2,170

Mr. William Hamilton: asked the Minister of Labour if he will give an assurance that applicants for industrial training in Scotland will be allowed to retain in their application forms those parts which will enable such applicants to remain in Scotland, and that the applications of those who retain those parts will receive the same consideration as other applications.

Mr. Hattersley: All applicants for training at Government Training Centres are asked to state where they would be prepared to accept suitable employment after training. It may not be possible to offer those who limit their mobility to certain areas the range of jobs available to more mobile applicants. With this qualification those who wish to remain in Scotland after training receive exactly the same consideration as other applicants.

Scotland, in 1952, 1963, 1966, 1967 and the estimates for the end of 1968.

Mr. Hattersley: Yes, Sir.

Mr. Hamilton: While I am very grateful for that answer, can my hon. Friend explain why training facilities were run down so criminally between 1952 and 1964, and does he not agree that some of our present difficulties of shortage of skilled labour in Scotland arose from this fact?

Mr. Hattersley: I do not think it either possible or appropriate for me to comment on what happened between 1952 and 1964, but I agree with the second part of the question, which makes clear that many of our difficulties in increasing the amount of Government training and its acceptability to industry would not have been met had it not been for the rundown during those years.

Following is the Table:

Mr. Hamilton: Has my hon. Friend received any evidence from the hon. Member for Hamilton (Mrs. Ewing) to support her statement on 18th December that Scottish applicants would not be considered for training unless they struck these provisions out of their application forms?

Mr. Hattersley: I have had no evidence from the hon. Lady to that effect but am loath to give a categorical assurance that she is wrong without having discussed the matter with her. She has not put the problem to me, and so far as I understand, the problem does not exist. My enthusiasm is to see that Scotsmen are given a chance to train in Scotland. The reference in my earlier Answer to moving out of Scotland was merely a reference to giving some of the men a chance to train south of the Border and then return to Scotland.

Women Employees (Working Hours)

Mrs. Renée Short: asked the Minister of Labour (1) when he expects the National Joint Advisory Council's Report on the Factories Act, as it applies to women workers, to be completed and available for publication;

(2) what proposals he intends to put before Parliament to remove legal restrictions on the working hours of women employed in factories.

Mr. Gunter: The Working Party appointed by my National Joint Advisory Council to examine the relevance to modern conditions of Part VI of the Factories Act, 1961 and associated legislation has completed its work and its report should be ready for submission to the meeting of the National Joint Advisory Council in April. I cannot say what proposals will be put forward regarding the restrictions on the working hours of women employed in factories until the Council has considered the Working Party's report.

Mrs. Renée Short: I thank my right hon. Friend for that reply and I hope that we shall have an opportunity to debate the restrictions at an early date. Will he give an undertaking that equal pay will be a prerequisite in the removal of existing restrictions which hedge round women's employment?

Mr. Gunter: I am very sorry, but I could not.

Unemployment (Aberdeen)

Mr. Hector Hughes: asked the Minister of Labour, if he will state the numbers, by sexes and trades, of the persons now unemployed in the city of Aberdeen and the figures for each of the last five years.

Mr. Fernyhough: I will with permission circulate in the OFFICIAL REPORT a table of figures for January, 1968. Correspcnding figures from 1963 to 1967 were given to my hon. Friend in answer to a similar Question on 6th February, 1967.

Mr. Hughes: I thank the Minister in advance for the figures he is to give. Will he use his good offices with the present President of the Board of Trade

with a view to asking him to continue the useful work by way of advance factories, trade, industry and commerce in Aberdeen initiated and carried out by the previous occupant at the Board of Trade?

Mr. Fernyhough: One Board of Trade factory was completed in November, another is due to be completed very shortly, and there is a projected factory to be built by the local authority. I hope that all these will get tenants very quickly.

Following is the information:


INDUSTRIAL ANALYSIS OF THE NUMBER OF PERSONS REGISTERED AS UNEMPLOYED IN THE AREA COVERED BY ABERDEEN EMPLOYMENT EXCHANGE AT 8TH JANUARY, 1968



Males
Females
Total


Agriculture and horticulture
95
2
97


Fishing
92
—
92


Bacon curing, meat and fish products
80
23
103


Shipbuilding and ship repairing
118
—
118


Spinning and doubling of cotton, flax and man-made fibres
15
2
17


Bricks, pottery, glass, cement, etc.
19
—
19


Timber
24
1
25


Construction
316
1
317


Sea transport
64
—
64


Distributive trades
232
64
296


Entertainment and sport
41
6
47


Catering, hotels, etc.
74
29
103


Private domestic service
3
10
13


Local government service
183
1
184


Other industries and services
782
119
901


Total, all industries and services
2,138
258
2,396

Minimum Wage Guarantee

Mr. William Price: asked the Minister of Labour when he proposes to seek to implement a minimum wage guarantee.

Mr. Hattersley: I have nothing to add to my reply to the hon. Member for Bothwell (Mr. James Hamilton) on Monday, 29th January 1968.—[Vol. 757, c. 216.]

Mr. Price: In view of the fact that the Government have promised to safeguard those who will have to withstand the burden of devaluation and other measures, when will my hon. Friend do something about the most difficult group of all, those on desperately low wages?

Mr. Hattersley: I am sure my hon. Friend knows that it is Government policy to assist the lowest-paid, partly through the criteria specifically directed to them in the Prices and Incomes policy and partly through the system of social security. He should know, if he is advocating a national minimum wage of about£15 a week, that the minimum cost to the country in a whole year would be£2,220 million, which is a sum not likely to be spent at present.

Mr. Crawshaw: Does not my hon. Friend agree that there is something wrong in a system whereby a man in full-time employment and with family responsibilities is sometimes worse off than a man on State assistance?

Mr. Hattersley: Of course, there is something wrong with that system and the Government understand the necessity to put it right, but it is not something which can be done in the short run.

North Walbottle Colliery (Closure)

Mr. Bob Brown: asked the Minister of Labour in view of the fact that a number of men will be redundant as a result of the closure of North Walbottle Colliery, what steps he is taking to ensure that sufficient suitable unfilled vacancies are available in the area.

Mr. Fernyhough: My employment staff will be making continuous efforts to find vacancies for any of these men who need help in obtaining new employment.

Mr. Brown: Would not my hon. Friend agree that if a tenant had been found for the advance factory standing empty on the Stanners trading estate, Newburn, the job of the Ministry of Labour would have been easier in reallocating these redundant miners?

Mr. Fernyhough: Of course, I agree and the Board of Trade will do everything it can to obtain a tenant for the factory. Of the 524 employed at this colliery, 283 will be offered alternative employment in other collieries, 72 will be retained on salvage work and 166 will become redundant.

Mr. Bob Brown: asked the Minister of Labour what representations he has had from men who may be redundant

when North Walbottle Colliery is closed, for retraining or rehabilitation courses; and what reply he has sent.

Mr. Hattersley: We have had no representations so far. Those miners who want and are suitable for training could obtain it at the Felling and Killingworth Government Training Centres where waiting time is short for most trades. Men needing industrial rehabilitation will be able to take a course at the Killingworth Industrial Rehabilitation Unit.

Mr. Brown: Will my hon. Friend consider having his officials hold pithead consultations well in advance of closures to let miners know precisely what training facilities exist for them?

Mr. Hattersley: That course of action would present substantial difficulties, not the least of which is that it is not yet known which men will be made redundant and which men will be re-absorbed. The Ministry of Labour cannot give any specific help until that information is available.

Docks (Voluntary Severance Payments Scheme)

Captain W. Elliot: asked the Minister of Labour what plans he has to make a Government contribution to a voluntary severance pay scheme in Great Britain's docks.

Mr. Gunter: While stressing the need for suitable arrangements to be made within the industry as soon as possible, I have informed the National Association of Port Employers that I see no case for a Government grant towards the cost of its proposed voluntary severance payments scheme.

Captain Elliot: Does not the Minister agree that increased productivity in the docks is a major need for Britain? Is it not very disappointing that owing to the economic situation the Government cannot make a contribution?

Mr. Gunter: I agree entirely with the hon. Gentleman's first proposition, but it must be borne in mind that the docks are not a declining industry as is the case with some industries. The£2¾ million initially required is still less than 5 per cent. of the wage bill.

Mr. R. Carr: If the Government are unable to support a voluntary scheme,


should not the docks industry be brought within the national redundancy payments scheme?

Mr. Gunter: It is certainly a matter which is worth considering, but there are problems. One problem is that the docks industry has never paid any contributions to the fund. I am giving consideration to this point. It will be understood that the docks industry was excluded from the scheme at its own request.

Selective Employment Tax

Mr. Mawby: asked the Minister of Labour what was the cost to his Department of the administration of Selective Employment Tax and repayments during 1967.

Mr. Hattersley: The estimated cost to the Ministry of making payments of premiums and refunds of Selective Employment Tax in 1967 was about£370,000.

Mr. Mawby: Is the Joint Parliamentary Secretary at least now satisfied that this is the most expensive and wasteful method of collecting taxes that has ever been devised?

Mr. Hattersley: I am satisfied that the Selective Employment Tax is doing the job for which it is intended very well indeed.

Mr. Farr: asked the Minister of Labour what he expects to be the cost to his Department of the administration of Selective Employment Tax and repayments during 1968.

Mr. Hattersley: I estimate that the cost to the Ministry of making payments of premiums and refunds of Selective Employment Tax in 1968 will be about£495,000.

Mr. Farr: I am grateful to know that the cost will be about£80,000 less than that for 1967, but is not this a very high cost of administration?

Mr. Hattersley: I am sorry that I did not make it clear to the House on the previous Question that I regard the Selective Employment Tax, and certainly the cost of its administration, as money well spent.

Mr. R. Carr: The Joint Parliamentary Secretary keeps on saying that he has evidence that this Tax is achieving its designed purpose. Why, then, has the purpose been changed by removing the premium?

Mr. Hattersley: If the right hon. Gentleman rereads the statement made by my right hon. Friend the then Chancellor of the Exchequer some weeks ago, he will see that one of the reasons why the selective employment premium was removed was, not that it was being a failure, but that it was being too successful.

Miss Quennell: Where has the margin of saving of about£80,000 over 1967 occurred?

Mr. Hattersley: By transferring the collection to a computer.

Factory Inspectorate (Recruitment)

Mr. Mawby: asked the Minister of Labour what effect the recently announced restrictions on public expenditure will have on plans for recruitment to the factory inspectorate.

Mr. Gunter: The restrictions on public expenditure will not affect recruitment to the current establishment of the factory inspectorate. They will, however, slow down the rate at which I can enlarge the inspectorate's establishment.

Mr. Mawby: I am grateful to the Minister for the first part of his Answer. Will he press as hard as he can to ensure that the slow-down in the rate of increase will be as small as possible?

Mr. Gunter: Yes; I will certainly bring all the pressure I can to bear at the appropriate time.

Public Expenditure (Restriction)

Mr. Farr: asked the Minister of Labour which activities of his Department will be affected by the cuts in public expenditure announced on 16th January.

Mr. Gunter: No cuts directly affecting my Department were announced on 16th January, but plans for the development of the Ministry's activities have been formulated with due regard to the present economic stringency.

Mr. Farr: Would the Minister be good enough to consider two possible economies that his Department could make—first, to abolish the Selective Employment Tax; and, secondly, to abolish the Agricultural Training Board?

Mr. Gunter: In both cases, "No".

Occupational Guidance Service

Mr. Lane: asked the Minister of Labour what postponement of the development of the Occupational Guidance Service will result from the recent restrictions on public expenditure.

Mr. Fernyhough: Expansion will continue but at a slower rate than previously planned.

Mr. Lane: Can the Joint Parliamentary Secretary assure us that he will resume the previous faster rate as soon as the economic situation permits, because we attach great importance to this?

Mr. Fernyhough: I can certainly give that assurance. I hope that the hon. Gentleman will understand that this means increasing the number of civil servants. In a recent debate the Government were subjected to a Motion of censure because of the numbers we already had in employment in the Civil Service.

Employment Exchanges

Mr. Scott-Hopkins: asked the Minister of Labour how many employment exchanges he estimates will be open by the end of 1968; and how this compares with the total on 31st December, 1967.

Mr. Fernyhough: The number of employment exchanges on 31st December, 1967 was 902. No change is expected in 1968.

Mr. Scott-Hopkins: Is the Joint Parliamentary Secretary satisfied that he will be able to cope with the extra work that his staff will be undertaking in the coming years with the existing numbers of exchanges?

Mr. Fernyhough: We are satisfied that we shall be able to maintain the same standard of service as we have given up to now.

Gibraltar (Immigration Quota)

Mr. Wall: asked the Minister of Labour if he will now take steps to give Gibraltar an immigration quota on the same lines as that for Malta.

Mr. Gunter: I would ask the hon. Member to await a statement which I hope to be able to make in the near future. In the meantime, he may like to know that last year 32 applications were received for vouchers for Gibraltarians and 20 were issued, compared with 52 and 16 respectively in 1966.

Mr. Wall: I thank the right hon. Gentleman for that reply, but will he bear in mind that what the Gibraltarians really want is exemption altogether from the Commonwealth Immigrants Act?

Mr. Gunter: I am fully aware of that. Sir.

Departmental Employees

Mr. Holland: asked the Minister of Labour what estimate he has made of the total number of civil servants who will be employed by his Department on 31st December, 1968; and how this compares with the equivalent date in 1967.

Mr. Tom Boardman: asked the Minister of Labour what decrease in recruitment to his Department during 1968 will result from the policy announced by the Government on 16th January.

Mr. Gunter: The total staff of my Department on 31st December, 1967, was 29,920, including 970 industrial staff. On 31st December, 1968, I expect to have some 500 fewer non-industrial civil servants. Not all the decrease will result from the policy announced on 16th January.

Mr. Holland: Can the right hon. Gentleman give slightly more detailed information about which of the functions of his Department will have to stand the greatest burden as a result of the cuts which he has announced?

Mr. Gunter: I do not think that there will be any burden on any section. There will, I am sure, be a fall in unemployment, which will give us some relief there; and there will be a saving of staff


as a result of the introduction of payment of selective employment refunds and premia by computer.

Mr. Scott: As the staff of his Ministry rose by over 1,500 between July and October, what has changed so dramatically so that a decrease is now possible?

Mr. Gunter: When I bring blessings, they are not well received. There has been no dramatic change. This is our assessment for the coming year, and I had hoped that it would be well received.

Mr. Kenneth Lewis: How many are employed in administering the Selective Employment Tax—the question I missed a minute ago?

Mr. Gunter: Yes, I remember that. I do not know whether it is in order, Mr. Speaker, to answer a previous question on this, but the answer is "None".

Bus Employees (Nottingham)

Mr. Holland: asked the Minister of Labour why, on 27th January, he took administrative action under Part II of the Prices and Incomes Act to postpone the payment of£1 per week award to be paid from 4th February to bus drivers and conductors in the City of Nottingham.

Mr. Gunter: Because the Government were not satisfied that the proposed increase was consistent with prices and incomes policy.

Mr. Holland: Does the Minister believe that, by putting an obstacle in the way of Nottingham Corporation's attempt to overcome the problems of transport staff shortage, he is helping the growth of the economy? If he does not—I do not believe that he does—will he give an undertaking not to put further obstacles in the way of implementing this award?

Mr. Gunter: I could give no guarantee that I shall not impede settlements which are out of accord with the prices and incomes policy. The hon. Gentleman rightly mentions Nottingham, but this was part of a national settlement which was quite out of accord—it was 7.8 per cent. and without any element of productivity at all.

Mr. Shinwell: If my right hon. Friend will not endorse this award—he may

have good reasons for not doing so—how do the Government propose to deal with the position of lower-paid workers? What is their policy to deal with that situation?

Mr. Gunter: I have asked the parties to go back to the Prices and Incomes Board to discuss this matter in detail. One of the dilemmas to be faced, in talking about the Prices and Incomes Board and the lower-paid worker, is that in this case, although I fully concede the point about the number of hours worked, the average gross pay of municipal drivers was£22 6s. 5d. and of conductors 19 1ls. 11d. In the circumstances, I asked the parties to go to the Prices and Incomes Board to discuss this fact, and, more particularly, whether they would sit down and talk about increased productivity.

Professional Executive Register

Mr. Kenneth Lewis: asked the Minister of Labour whether he will instruct the Professional Executive Register to refuse to provide names of persons on that register to employers who use the services of management inquiry agents.

Mr. Gunter: This would be impracticable.

Mr. Lewis: May we have the Minister's assurance that those who may in the past have been in trouble with the police may nevertheless put their names on the register and have them put forward for suitable jobs as they arise?

Mr. Gunter: Yes, Sir. I tried to make this clear in answer to Question No. 5. This is one of the things I resent most about it. If lads who may have made a mistake are to be hounded for it throughout the whole of their working lives, it is a very poor tribute to conditions in this country.

Mr. John Page: Will the Minister make names on the register available to bona-fide employment agencies and consultants so that a wider range of opportunities for employment may be given to these people when seeking jobs?

Mr. Gunter: That matter has been raised before. The great difficulty is to determine which are bona-fide agencies. There are so many, and I do not want the task of saying that one is respectable and another is not.

Mr. Dunn: Does not my right hon. Friend agree that responsibility in this type of activity rests squarely with employers, and will he say what action he can take to combat the menace? We cannot solve the problem by saying that names should be taken off the official register or that they be withheld. Something more positive must be done.

Mr. Gunter: I have tried to explain that it is extremely difficult for the Government to contemplate legislation which in itself might be impracticable in enforcement. But my hon. Friend is quite right in saying that the duty of identifying past character and the capabilities of people he is minded to employ rests squarely on the employer. He should make inquiries, as the vast majority do, of the previous employer.

Women (Equal Pay)

Mr. Julius Silverman: asked the Minister of Labour whether he will refer to the National Board for Prices and Incomes the question of equal pay for women.

Mr. Gunter: No, Sir.

Mr. Silverman: Why not? One appreciates that it might be difficult in present economic circumstances to implement this objective, but, at the same time, does not the Minister think that to take this course and put the matter before the Prices and Incomes Board would at least show the Government's support for this proposal and for its ultimate implementation?

Mr. Gunter: The course suggested by my hon. Friend would in many ways be a duplication of what is happening now. He will know that the Government have already accepted the commitment in principle to equal pay—

Mrs. Renée Short: Not before time.

Mr. Gunter: Yes, I know it is a long time—but what is in question is the difficulty of implementing the principle in present circumstances. A study of the technical problems and an effort to come to terms on the divergence of opinion within the unions themselves and between industry and the unions is now going on, and I await the report.

Redundancy Payments

Mr. Ridley: asked the Minister of Labour if he will amend the redundancy pay scheme, in view of the fact that the fund is now£8 million in deficit.

Mr. Hattersley: We have no current plans for amending the Redundancy Payments Act, but we are consulting with industry about the financial position of the fund.

Mr. Ridley: Does the hon. Gentleman realise that, every time he tells us that he is putting up the contributions or something like that, the fund goes more into deficit? Does he realise that this happens because he is being taken for a ride—it is a sort of bonanza for anyone lucky enough to get a bogus sacking—and he must do something about it soon? Will he do it now?

Mr. Hattersley: The hon. Gentleman is quite wrong. It is not when announcements of increased contributions are made that the fund goes further into deficit but when I come to the House and ask for permission to allow the fund to go further into deficit. Moreover, he is absolutely wrong in that part of his supplementary question when he described the fund as a sort of bonanza. That is totally out of line with the facts.

Mr. Dunn: Will my hon. Friend take note of the one or two instances where it has appeared that the fund is being abused, namely, where there is a transfer of the name and occupation of an employer, and, very often, golden handshakes being given out in the main to executive grades?

Mr. Hattersley: With a scheme of this complexity and magnitude, there will be individual occasions when unscrupulous advantage is taken of the fund, but these are by no means frequent. I think I know the example to which my hon. Friend refers, and my information is that it is a very peculiar one depending entirely on the firm in question being set up after a franchise and the franchise running out at a specific time.

Mr. R. Carr: Will the Minister bear in mind that, while there is universal support for the purpose of this scheme,


there is some doubt, in the light of experience as to whether it is quite the best way of achieving that purpose?

Mr. Hattersley: I know that feeling very well, and the right hon. Gentleman and some of his hon. Friends have expressed it for some time. All I can tell the House is that the financial stability of the fund is under consideration. I am sure that we all want to ensure that it continues on a sound financial basis.

Scotland

Mr. G. Campbell: asked the Minister of Labour (1) how many new jobs were created in Scotland in 1967; and how many of these were in manufacturing industries;

(2) how many jobs disappeared in Scotland during 1967; and how many of these were in service industries.

Mr. Fernyhough: The only estimates of jobs in Scotland analysed by industry are those for each mid-year. The first opportunity to measure the change between June, 1966, and June, 1967, will occur later this month when the June, 1967, figures become available.

Mr. Campbell: As the White Paper on the., Scottish economy, sometimes also known as the Scottish Plan, was closely geared to the creation of new jobs, will the, Minister try to get this information much sooner, so that we can see what the effects of the Selective Employment Tax have been?

Mr. Fernyhough: The hon. Gentleman will not have to wait much longer for the figures to which I referred, but I wish that he would understand that the more detailed information hon. Members demand, the more staff is required to supply it. Hon. Members cannot one day ask us to give them detailed information which demands a great deal of manpower and next day call for a reduction in the Civil Service.

Foreign Artistes

Mr. Henig: asked the Minister of Labour (1) on what grounds he decides whether or not to issue permits for foreign singers to undertake operatic roles at the Royal Opera House;

(2) why he refused a permit for Mr. Richard Cassilly to sing the rôle of Radames at the Royal Opera House.

Sir T. Beamish: asked the Minister of Labour (1) how many of his staff, of what grades, are employed in making comparative evaluations of British and foreign artistes; how many foreign artistes have been banned during the past 12 months on the grounds that British artistes were as good if he is satisfied that the method of evaluation adopted is consistent with the highest standards of artistic judgment; and if he will make a statement;

(2) what qualifications are held by the members of his staff with responsibility for assessing the relative merits of foreign and British artistes; what trial took place of the singing and acting of Mr. Richard Cassilly; and why he permitted him to appear at Covent Garden but not on British Broadcasting Corporation Television.

Mr. Gunter: Permits for foreign opera singers to perform in this country are issued in the light of the known circumstances with due regard to the availability of British artistes. My staff are not required to assess the artistic merits of the artistes concerned and no staff are engaged on comparative evaluations of this kind. Permission was given for Mr. Richard Cassilly to appear at Covent Garden because no suitable British singer was available to undertake this particular rôle, but for the B.B.C. production of "Aida" it was ascertained, after consultation with the British Actors Equity Association, that a British artiste of international repute, accustomed to singing the role of Radames, was available to undertake the engagement.

Mr. Henig: Is my right hon. Friend aware that Mr. Richard Cassilly was announced to sing only that one performance, which was the one being televised? Does the Ministry of Labour now keep a roster of all operatic roles with a little tick against them where it is considered that suitable British singers are available? Are we to understand that if in the future a performance is televised, as we hope it will be, changes may be required in the cast already singing at Covent Garden because the Ministry considers that if it is televised different conditions appertain?

Mr. Speaker: Order. Too long—even for "Aida".

Mr. Gunter: I can assure my hon. Friend that we do not have a list that we tick. During 1967 there were 112 applications for opera singers and only one was refused. Of a total of 7,323 applications for artists of all kinds, only 40 were refused—just over one half of one per cent.

Mr. Maudling: How does the Minister decide whether suitable British performers are available if he cannot assess their artistic merits?

Mr. Gunter: That is why we must consult. The difficulty was greater in this case because, as I understand it, there was no conflict as to who had the better voice. It was a question of what the B.B.C. called the physical appearance. Whether that meant that one artiste was tall or short, or whether he looked better in tights, I do not know.

Mr. Boyd-Carpenter: Does not the high standing of Covent Garden depend on the fact that it presents international opera on the highest level? Is it not quite wrong for the right hon. Gentleman to interfere in the choice of artistes, and is it not damaging to the standing of our greatest opera house?

Mr. Gunter: Let me be very clear about this. This is the first occasion I have had to face a situation of this character as Minister of Labour. In my wildest dreams I never imagined that I should be brought to this state. I thought that the regulations laid down were concerned with the safeguarding of British workpeople and their conditions. But the theatre is an industry and I must have regard to the overall regulations. I always understood that among the cultured people art was international—hands across the sea and the rest of it.

Mr. Hugh Jenkins: Is my right hon. Friend aware that the result of the consultation to which he referred has been that this country pursues a more liberal policy than any other in this respect? More people from elsewhere in the world perform here than is the case in any other country.

Mr. Gunter: Yes, indeed, and that is one of the difficulties. There are other countries which are much more restric

live with British artistes, and therefore it is very natural that our people want to have a bash occasionally.

Mr. Hugh Jenkins: asked the Minister of Labour what advice he has received from outside bodies to issue a work permit to enable a tenor singer to appear at the Royal Opera House, Covent Garden; and if he will give an assurance that this advice will receive the same consideration as the negative advice in respect of the same singer received on a previous occasion.

Mr. Gunter: I assume that the Question refers to Richard Cassilly, the American tenor. An application for this singer to appear at the Royal Opera House, Covent Garden, in "Jenufa" was approved following the normal inquiries including consultation with the British Actors Equity Association. Advice given in such consultations is confidential but information from all appropriate sources is given full consideration before labour permits are issued.

Full Employment

Mr. William Price: asked the Minister of Labour whether he will define the term, full employment, as used by his Department.

Mr. Gunter: The reduction of involuntary unemployment to the lowest practicable level.

Mr. Price: Will my right hon. Friend bear in mind that, whatever some of the academics say, there is only one interpretation of full employment on this side of the House, and that we want it implemented?

Mr. Gunter: Indeed.

Juvenile Artistes (Payment)

Mr. Hugh Jenkins: asked the Minister of Labour if he is aware that the Winstanley Babes, a troupe of juveniles, employed in pantomime at the Palace Theatre, Manchester, were paid£1 12s. 6d. per week each; and if he will refer this to the National Board for Prices and Incomes.

Mr. Hattersley: The welfare of these children who, I am informed, are aged 12 and 13, is a matter for the local authority. I do not think this is an


appropriate matter for reference to the National Board for Prices and Incomes.

Mr. Jenkins: Is it not the case that the terms under which the National Board for Prices and Incomes was set up do not preclude the possibility of raising salaries as well as reducing them? Does my hon. Friend agree that 32s. 6d. a week is a very small salary for anybody who appears professionally, even if under the age of 16?

Mr. Hattersley: My hon. Friend is right about the powers and functions of the Board, but I am not sure that he is quite so right about the wages of these children received. There is a question of whether they were wages or simply expenses.

Salaried Workers (Annual Increments)

Mr. Brooks: asked the Minister of Labour how many salaried workers gained annual increments to their earnings during 1966 and 1967, respectively; what was the total amount of such increments in each year; and in what proporportion of cases were these increments related to increases in productivity.

Mr. Hattersley: This information is not available. Annual salary increments are usually related to increases in age, experience and responsibility.

Mr. Brooks: Does my hon. Friend agree that there seems to be one law for the salaried worker and another for the manual worker? Many manual workers regard the annual round of wage increases as equivalent to the annual increments received by salaried workers. Is it not time for the National Board for Prices and Incomes to be seen to be realistic and fair? Will my hon. Friend have this sort of anomaly looked into quickly?

Mr. Hattersley: I do not think that it is an anomaly of the sort which my hon. Friend suggests. The increment increase in many cases is virtually the same as promotion, as a man takes on an extra job or one with more responsibility. For that reason, it cannot be compared with an annual salary increase.

Mr. Ellis: Is my hon. Friend aware that his answer is just an excuse, and that if he really looks into the question he will find that what my hon. Friend the

Member for Bebington (Mr. Brooks) said is very much the truth?

Mr. Hattersley: Our information is that most employers are operating annual increments in the way that the Government would expect them to do. If my hon. Friend has information which leads him to believe that individual companies are ignoring our prices and incomes policy, I hope that he will present it to my right hon. Friend.

Mr. Brooks: asked the Minister of Labour whether he will refer to the National Board for Prices and Incomes those salary agreements now being made which permit substantial annual increments without corresponding productivity increases.

Mr. Hattersley: I do not know which particular agreements my hon. Friend is referring to but the requirements of Command 3235 apply to salaries, and the National Board for Prices and Incomes is available to investigate whether the requirements are being met.

Mr. Brooks: If local municipal bus undertakings came to agreements with their workers in the next few months which would involve annual increments so that they were on a salaried basis, would my hon. Friend have any objection?

Mr. Hattersley: That would depend on whether the increments were related to age, responsibility and the other things which normally make increments not so much an annual increase but virtual promotion.

Old People (Cost-of-living Index)

Mr. Ridsdale: asked the Minister of Labour what has been the result of the consideration given to establishing a cost-of-living index for old people; and if he will make a statement.

Mr. Hattersley: The desirability of calculating and publishing retail prices indices for special social and income groups is one of the matters being considered by the Cost of Living Advisory Committee. My right hon. Friend expects to receive its report in the next few months.

Mr. Ridsdale: Would not the hon. Gentleman agree that such an index is


urgent, particularly as those who retired on low fixed incomes are the worst hit by devaluation and present rising prices?

Mr. Hattersley: As the hon. Gentleman knows, steps will be taken to protect some of the classes to whom he referred from the rising prices involved in devaluation. Notwithstanding that, I have a great deal of sympathy for the theory that individual group indices should be cultivated. But the last time the Cost of Living Advisory Committee made a recommendation on this point it did not agree with the view that both the hon. Member and I hold.

Mr. Henig: Would my hon. Friend say whether if such an index had already existed it would have shown that the rise in the cost of living for these people was more or less than the rise in their incomes since October, 1964?

Mr. Hattersley: That question contains two hypotheses, and I think I will answer neither.

Bristol Docks (Welfare Amenity Scheme)

Mr. Ellis: asked the Minister of Labour if he has received proposals on a welfare amenity scheme for the port of Bristol as required by the Docks and Harbours Act, 1966; and if he will give details of the scheme.

Mr. Fernyhough: The draft proposals have had to be amended because of changes in the concentration of work at Bristol City and Avonmouth Docks. However, substantial progress has already been made in advance of formal approval and the final scheme is expected to be submitted soon.

Mr. Ellis: Will my hon. Friend make these proposals fully available to the Transport and General Workers' Union, because we have reason to believe that the first part of the scheme has been launched and the facilities provided in the proposals that he will have placed in front of him are not as comprehensive as they were? Is he aware that some of us who were concerned with the Docks and Harbours Act thought that its great object was to provide decent facilities for the first time and are anxious to see it implemented in the proper way?

Mr. Fernyhough: I think that my hon. Friend can take it for granted that those provisions will be put into operation in an appropriate way. The proposed scheme envisages considerable new construction and much is already completed. An early start can be expected of work which has been planned.

Colliery Closures, South Ayrshire

Mr. Emrys Hughes: asked the Minister of Labour how many men he estimates will lose their jobs in South Ayrshire following the proposed closure of the mines at Kames Colliery, Muirkirk, and Beoch Colliery, Dalmellington; and what action he is taking to find alternative employment for them.

Mr. Fernyhough: It is estimated that about 250 men will become redundant when the Kames and Beoch collieries close. My local officers will do all they can to help these men to find other work and will offer training facilities where appropriate.

Mr. Emrys Hughes: Will my hon. Friend keep in mind the fact that there is great anxiety in these isolated places about alternative employment not being ready by the time a pit closes? This presents a serious problem both in Muirkirk and the Doon Valley? Can he assure us about his energy and intentions in this matter?

Mr. Fernyhough: My hon. Friend of all people ought not to want reassuring about my energy and interest in this matter.

Hotel Workers, Torquay (Union Representation)

Sir J. Eden: asked the Minister of Labour if he will make a statement about the threatened spread of the dispute between the Transport and General Workers' Union and the Municipal and General Workers' Union affecting the tourist industry.

Sir F. Bennett: asked the Minister of Labour what progress he has made in his attempts to settle the industrial inter-trade union dispute in Torbay; and whether he will make a statement.

Mr. Speaker: These Questions will be answered at the end of Question Time.

Clydeside

Mr. Rankin: asked the Minister of Labour what steps he is taking to deal with the increasing unemployment on Clydeside.

Mr. Fernyhough: The provisional figures for the February count of unemployment for the Glasgow group of employment exchanges indicate a slight improvement compared with the previous month. My local officers are doing all they can to help those unemployed to find other work and to offer training facilities where appropriate.

Mr. Rankin: I am grateful for that Answer.

Mr. Rankin: asked the Minister of Labour what plans he has prepared for the retraining of skilled persons now unemployed on Clydeside, particularly those engaged in shipbuilding.

Mr. Hattersley: Skilled workers who are no longer able to make use of their skills are eligible for retraining at any of the Ministry's 38 Government Training Centres. There are already four such centres within daily travelling distance of Clydeside and a fifth will open at Bellshill (North Lanarkshire) this summer.

Mr. Rankin: Is my hon. Friend aware that, while individuals may be eligible for training, the number of skilled persons on Clydeside who are presently being retrained is very small? In view of the changes which may be taking place soon on Upper Clydeside which might lead to further unemployment, will he look into the position very closely?

Mr. Hattersley: I will certainly look into it as I know my hon. Friend wishes me to do, but I think he should be comforted by the knowledge that a fifth centre is to be opened soon and will take many of the men about whom he speaks.

Mr. Edward M. Taylor: Is the hon. Gentleman aware that the future of the Upper Clyde merger is in danger because of the shortage of work, and was it not madness on the part of the Government to turn down the naval orders from South Africa which might have kept men employed?

Mr. Hattersley: The hon. Gentleman must grind his axe to the appropriate Minister.

Oral Answers to Questions — ALGERIA (DETAINED BRITISH AIRCRAFT)

Mr. Ronald Bell: asked the Secretary of State for Foreign Affairs what progress he has made in obtaining the release of the British aircraft which has now been held by the Algerian Government for six months.

The Under-Secretary of State for Foreign Affairs (Mr. William Rodgers): The aircraft is still detained. We are, however, in close touch with the Algerian authorities on this matter, and do not expect that the release of the aircraft will be long delayed.

Mr. Bell: Would the hon. Gentleman bear in mind that the Foreign Office has been in close touch with the Algerian Government now for seven months and that this is a very long time for a British aircraft to be unjustifiably detained in a foreign country? What specific efforts has his right hon. Friend in mind?

Mr. Rodgers: I agree with the hon. Gentleman that this is a long time, and I think that every hon. Member will regret it. The problem has not been an easy one, and it is not one which can necessarily be solved by the usual and conventional methods. We take the view that the improvement in relations between ourselves and Algeria will provide an atmosphere in which the release will not now be long delayed.

Mr. Biggs-Davison: What explanation or excuse do the Algerian authorities offer for this piratical retention of the aircraft? Cannot the Foreign Office be a little more energetic in their efforts to get something done?

Mr. Rodgers: I think that the object is to ensure as soon as we possibly can that the aircraft is released. The House must recognise that being energetic in this is not a virtue; in fact, it could be other than productive. I fully understand the concern of the House that the aircraft has been detained too long. I simply ask for patience a little longer because we believe that an atmosphere is developing in which the aircraft will be released.

Mr. Maudling: The hon. Gentleman has not answered the question put by my hon. Friend, which was what excuse or reason did the Algerians give for this action?

Mr. Rodgers: The Algerians took a particular view about the initial circumstances in which the aircraft landed in their country. I am not saying that any reason which they have provided would be accepted by the right hon. Gentleman or the House as being an adequate reason or excuse. There are circumstances—I think that the right hon. Gentleman will understand this—where the actual formula is less important than the circumstances, the suspicions and the attitudes which may exist. What I am saying is that I think that as we move towards more normal relations the atmosphere will be one in which the aircraft will be released, which must surely be the object of the exercise.

Mr. Richard Wood: Cannot the hon. Gentleman say what the reasons were?

Mr. Rodgers: As I have just said, and as the House will know, the Algerian Government at the time the aircraft landed had certain grave suspicions. [HON. MEMBERS: "What were they?"] Since then we have endeavoured to persuade them that such suspicions as they had did not apply either to the aircraft or to the British subjects who were involved. We succeeded in getting the pilots released. I think that this was a considerable achievement. We now want to get the aircraft released as soon as possible. While I fully understand the impatience of hon. Members, I ask them to consider whether loud pronouncements on the part of Ministers will necessarily bring this stage nearer. I do not believe it will.

Mr. G. Campbell: While we do not expect loud pronouncements from the hon. Gentleman, could not he say what the suspicions or allegations of the Algerian Government were?

Mr. Rodgers: It is not for me to read the minds of the Algerian Government and I think that the House, if it considers this matter carefully, will recognise that there are problems which sometimes involve this country where a foreign Government appears to be unreasonable but where no steps are open to us in the

middle of the twentieth century which would enable us to achieve our purpose.

Mr. Cronin: Would it not prejudice the negotiations my hon. Friend is conducting to disclose the information which right hon. and hon. Members opposite want? Will he also continue to use the patience and good sense he has displayed so far instead of behaving like a bull in a china shop, as they would have him do?

Mr. Rodgers: I thank my hon. Friend. It is for the House itself to judge whether there is, as I believe, virtue in what he says.

Mr. Bell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of all those replies, I beg to give notice that I shall seek to raise this matter on the Adjournment.

HOTEL WORKERS, TORQUAY (UNION REPRESENTATION)

The following Questions stood upon the Order Paper:

The Minister of Labour (Mr. R. J. Gunter): With your permission, Mr. Speaker, I should like to give the reply now to Questions Nos. 75 and 78.
I share the hon. Members' concern at the effects of this dispute on the hotel trade in Torquay, and its possible effects elsewhere. My Department has had discussions with officers of the Transport and General Workers' Union and the General and Municipal Workers' Union and has also been in touch with the T.U.C. I shall be seeing representatives of the Transport and General Workers' Union later today, and representatives of the General and Municipal Workers' Union tomorrow morning.

Sir J. Eden: Is not one very serious aspect of this attempt by one union to seize the membership of another the way in which national services are being threatened? Does not the dispute demonstrate clearly the urgent need to reform the law so as to enable the injured party to seek redress in a properly constituted industrial court?

Mr. Gunter: I am inclined to agree with the latter part of that supplementary


question. I shall continue my probing with the T.U.C., and I may add that this dispute should not have been put on my plate but should be settled within the machinery of the T.U.C.

Sir F. Bennett: In expressing his concern, will not the right hon. Gentleman agree that serious legal issues are involved which, unless there is a rapid settlement, might become legal in every sense of the word? Will he express particular sympathy for the hoteliers and their guests who are suffering for no good reason at all, who have no dispute with the Transport and General Workers' Union, but are only standing by longstanding agreements with the General and Municipal Workers' Union?

Mr. Gunter: It would be better if I explored these matters tonight.

Mr. Emrys Hughes: Is my right hon. Friend aware that the worst possible way to deal with trade union difficulties is to take the advice of the Conservative Party?

Mr. R. Carr: I welcome what the right hon. Gentleman said in agreement with the point made by my hon. Friend the Member for Bournemouth, West (Sir J. Eden) about the need for properly constituted industrial courts, but does not the right hon. Gentleman think it wrong that inter-union warfare of this irresponsible kind should be protected by legislation which was put on the Statute Book to protect trade unions in lawful disputes with employers? Should not the law be changed?

Mr. Gunter: I shall not be drawn into an argument about what is responsible or irresponsible, since I have to meet union representatives tonight. But to me it is a great pity that two great unions, with all their traditions, cannot settle their quarrels without bringing me into it.

Mr. Frank Allaun: While recognising that inter-union disputes are probably the least fortunate kind of union dispute, does not my right hon. Friend think that inter-employer disputes such as that between G.E.C. and A.E.I. cause far more redundancy?

Mr. Gunter: I agree that a lot of fault falls on employers, but I did not know that A.E.I. and G.E.C. were in dispute.

Mr. Mawby: Does not the right hon. Gentleman feel that this whole action is in breach at least of the principles of the Bridlington agreement? Will he try to impress upon the T.U.C. the need to use the disputes machinery to put this matter right, so that a lot of innocent bystanders are not involved?

Mr. Gunter: I would not like to say whether this dispute is in breach of the Bridlington agreement or not. But I understood that there was proper machinery between the unions for settling such disputes.

Mr. Ellis: Is my right hon. Friend aware that there is more to this case than an inter-union dispute, and that before the matter blew up many employers in the area were not interested and actively discouraged people employed in these hotels to join unions? Is my right hon. Friend also aware that he should not give way so easily to representations made on one facet of this matter?

Mr. Gunter: I did not know that I had given way to any representations, but I do know that the hotel and catering industry is very badly organised.

Mr. Ellis: That is right.

Mr. Gunter: I do not know how one can blame the employers alone for that. To me, if two great unions like the T. & G.W.U. and G. & M.W.U. cannot come together and ensure that that organisation takes place within the next six months, they are much weaker vessels than I believed. They should act together. They have the joint machinery for doing so and have an agreement to do so. All they have to do is to get their dispute out of the way. I hope that then they will be able to achieve 100 per cent. membership as soon as possible.

Sir D. Walker-Smith: As the right hon. Gentleman quite properly refused to assent to the suggestion put by the hon. Member for South Ayrshire (Mr. Emrys Hughes), will he give full and conscientious consideration to the proposals for dealing with these problems made by the Society of Conservative Lawyers if I send him a copy of them?

Mr. Gunter: The right hon. and learned Gentleman need not do so. I have read that publication and there are only parts of it which are any good.

Mr. Edwin Wainwright: Is my right hon. Friend aware that many of us on this side of the House deplore any conflict which may arise between two large unions and the action involved? But does not he agree that one of the main causes of the problem is the bad working conditions and long hours worked in many hotels?

Mr. Gunter: I entirely agree. I have already said that the workers are badly organised and that conditions should be dealt with. But the worst way to deal with them is for two unions to row about it.

Sir F. Bennett: On a point of order, Mr. Speaker. While I fully appreciate that the Minister is doing his best, I must give notice—

Mr. Speaker: Order. In the conventional way, please.

Sir F. Bennett: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible moment.

BRITISH UNITED AIRWAYS AND BRITISH AIRLINE PILOTS' ASSOCIATION (DISPUTE)

Mr. Lubbock (by Private Notice): asked the Minister of Labour if he will make a statement about the dispute between B.U.A. and B.A.L.P.A.

Mr. Gunter: Last month the management of British United Airways Limited withdrew recognition from the British Airline Pilots' Association with which it had previously negotiated on pay and conditions for pilots. A number of pilots in the company's employment have since accepted individual contracts circulated by the Company without previous consultation with the Association.
At meetings which I had with the two sides earlier this month, B.A.L.P.A. indicated its willingness to me, if recognition were restored, to give serious and sympathetic consideration to measures necessary to assist the Company at the present time. In the light of this, the Company undertook to me to give further consideration to its decision to withdraw recognition, but has since re-affirmed it.
In this situation, the National Joint Council for Civil Air Transport met at the end of last week and asked me to make a further approach to the parties, but before I was able to do so, the Pilots' Association decided on Saturday, 17th February, on immediate strike action. I had meetings the same evening with representatives of the Association, the Company and also with the Chairman of the National Joint Council, but these did not result in any change in the situation. I have today invited the company and the Association to a very early joint meeting under my chairmanship.

Mr. Lubbock: Is the right hon. Gentleman aware that the National Joint Council for Civil Transport, at a meeting on Friday, unanimously condemned the activities of this employer, which have included not only intimidation of the pilots but bullying and hectoring the wives of the pilots to influence their husbands into signing these independent agreements? Does he realise that trade unions in the civil aviation industry will give full support to the pilots and that, unless this deadlock is broken, there will be a complete disruption of the operations of British United Airways by this evening? Will he condemn the handling by British United Airways of this dispute and tell B.U.A. that if it does not return to the orderly negotiating procedures, as recommended by the National Joint Council, he will recommend the President of the Board of Trade to exercise his functions under Section 3(2) of the Civil Aviation (Licensing) Act and suspend all the company's licences?

Mr. Speaker: Supplementary questions, even on a Private Notice Question, should be reasonably brief.

Mr. Gunter: I shall not make much comment at this stage, not until I know what happens at the meeting at 4 o'clock this afternoon between the unions and B.U.A. I understand that it is to be followed by a board meeting of B.U.A. tomorrow morning. When I know what decisions have been reached, I will know how to move.
I ought to say in response to the hon. Gentleman's rather violent suggestions that I deplore the action of B.U.A. It has taken what in my experience has been the unprecedented step of withdrawing recognition from a trade union


with which it has negotiated for years. If it be argued that it has done so because the demands of the union are irresponsible, my reply is that I should soon be in Broadmoor, or somewhere like it, if every employer's association did so. They were irresponsible. While the pilots may have been irresponsible, United Airways may have been unrealistic in its reply. Nevertheless, the withdrawal of recognition from a bona fide trade union is a very serious step. It makes my task almost impossible if British United Airways will not recognise the pilots. How on earth can I get them round the table to talk about it?

Mr. Rankin: Would it be true to say that the genesis of this struggle is that Mr. Bristow is seeking to destroy a system of negotiation which has been in operation for a long time, namely, the system of collective bargaining, and to substitute for it agreements privately reached between each pilot and Mr. Bristow? Does my right hon. Friend realise that if that system were accepted for the pilots, it would soon extend to every one of the 6,000 employees of B.U.A.? Ough he not to do his best to bring Mr. Bristow, the chief cause of the trouble, to his senses as quickly as possible?

Mr. Gunter: It would be unfortunate if I were drawn into a discussion of the merits and demerits of Mr. Alan Bristow.

Mr. Frederic Harris: Should not the message from the House be that commonsense should prevail in these negotiations to bring about a situation which will end the possible falling out of an organisation such as this, with appalling effects on all concerned?

Mr. Gunter: Mr. Gunterindicated assent.

Mr. Dobson: Is my right hon. Friend aware that there is wide appreciation of his statement in the House, placing, as we think it does, the blame fairly on the employer's side? In his meetings tonight will he try to achieve with the management side, first, a recognition of B.A.L.P.A. and, secondly, the withdrawal of private agreements now being entered into so as to enable proper trade union representation to be continued?

Mr. Gunter: I could not give undertakings of any kind in negotiations of this character. There are elements in what

the pilots have asked for which could be described as irresponsible, but that is no reason why their union should not be recognised. I can only emphasise that my difficulty is that until there is recognition, I do not know how the heck I can get the parties round the table.

Mr. R. Carr: I do not wish to draw the Minister into making comments on this case which may make his job this afternoon more difficult. However, would he not agree that this trouble is yet another example proving the need for a modern industrial relations law, including provisions laying down the rights of trade unions to be recognised, as is the case in almost every other modern industrial country?

Mr. Gunter: I do not know that any law would have been very helpful in this instance. We were dealing with some very funny personalities.

BILLS PRESENTED

CLIENTS' MONEY (ACCOUNTS)

Bill to make special provision for safeguarding clients' money or deposits; and for purposes connected therewith presented by Mr. Anthony Grant; supported by Mr. John Hall, Mr. John Hunt, Mr. Reginald Eyre, Mr. R. Graham Page, Mr. Hugh Rossi, Sir Barnett Janner, and Mr. Gordon Oakes; read the First time; to be read a Second time upon Friday 3rd May and to be printed. [Bill 87.]

WATER RESOURCES

Bill to amend section 27 of the Water Resources Act 1963 presented by Mr. Anthony Greenwood; supported by Mr. Hughes, Mr. Niall MacDermot, Mr. James MacColl, and Mr. Arthur Skeffington; read the First time; to be read a Second time tomorrow and to be printed. [Bill 88.]

BUSINESS OF THE HOUSE (REVENUE (No. 2) BILL AND NATIONAL LOANS BILL)

Ordered,

That the consideration and Third Reading of the Revenue (No. 2) Bill may be taken immediately after the Report thereof and that the Third Reading of the National Loans Bill may be taken immediately after the consideration of the Bill, notwithstanding the practice of this House as to the interval between the various stages of such Bills.—[Mr. Armstrong.]

Orders of the Day — REVENUE (No. 2) BILL

Considered in Committee.

[Sir ERIC FLETCHER in the Chair]

Clause 1.

(WITHDRAWAL OF PART OF SELECTIVE EMPLOYMENT PAYMENTS OUTSIDE DEVELOPMENT AREAS.)

Mr. Stanley Henig: I beg to move Amendment No. 1, in page 1, line 14, leave out '1968' and insert '1969 '.

The Chairman: I think that it would be for the convenience of the Committee if at the same time we discussed Amendment No. 5, in page 2, line 9, leave out '1968' and insert '1969', and Amendment No. 6, in line 41, leave out '1968' and insert `1969'.

Mr. Henig: The object of the Amendment is to be both helpful and to probe. The effect of the three Amendments would be to put off for twelve months, from April, 1968, to April, 1969, the coming into force of a further discrimination in the treatment given to development areas and all other areas not being development areas. My right hon. Friends will appreciate that the events of the last week or two mean that we now cannot be concerned simply with discrimination between development and grey areas and that all sorts of areas are now claiming to be grey, for example, East London. I make no comment on that; it simply serves to show the importance of this issue.
The date proposed for the effective coming into force of the changes proposed by Clause 1, 1st April, is only seven months from the introduction on 4th September, last year, of the regional employment premium. As the objectives of the premium and the selective employment premium, as it will be, are roughly similar, it may be in order to make a number of brief references to the regional employment premium. The principle of that premium was that 30s. per employee per week should be paid to an employer with an establishment in a

development area. The Bill suggests that 7s. 6d. per week per employee should also be given to an employer in a development area, so that the total from the two sources is 37s. 6d.
In effect, what Clause I does is to amend not so much the Selective Payments Act, 1966, as it does nominally, but the regional employment premium Sections of the Finance Act, 1967. Delaying the putting into operation of these provisions for twelve months would be helpful to the Government for a number of reasons.
First, having been made aware by some of us of the problems of some parts of the country because of this 30s. subvention, the Government agreed to establish the Hunt Committee to consider them. It is meeting now, although not with any great urgency—about once a month, when its Chairman is not out of the country, I believe. Perhaps it will meet more often in future.
But what will be its job? It has to consider the effects on grey areas of a Government subvention of 30s. a man per week in the development areas, yet, seven months later, that 30s. has been increased to 37s. 6d. This might set the Hunt Committee right back to the beginning, since it will have to consider something new, but then one will want to know what made the Government decide to increase the sum. What is the evidence?
One of the reasons for the Bill and this new discrimination is that it will save money—£75 million a year—by means of Clause 1. Is it a saving? I gather that the regional employment premium constituted "spending" but that this Clause involves "saving", because it is concerned with non-development areas. If the selective employment premium is given to employers within development areas, that is "spending" but outside development areas it is not. But unemployment outside may be just as high. I do not understand this and would like an explanation.
In suggesting this deferment for 12 months, I accept the principle that giving all employers 7s. 6d. per employee in all parts of the country was nonsense. There was never any real justification for it, but we are saying something more if the Amendment is accepted—that to dismantle parts of this structure without


dismantling the whole will cause great problems and throw into jeopardy the Hunt Committee's investigations of the difficulties by increasing those difficulties in the middle and so on.
For this reason, and to inquire into the Government's motivations, I propose the Amendment, because it will help them to sort out in the next 12 months their policy and what they want inducements in development areas to be, as well as giving the Committee proper time to report and allowing whatever other measures may possibly be brought in to come into effect in April, 1969.

The Chief Secretary to the Treasury (Mr. John Diamond): I have listened carefully to my hon. Friend the Member for Lancaster (Mr. Henig) and I understand his interest in this matter and in those particular problems, which he is well equipped to know, of his own constituency, but he has not set the matter in its full context. What is being proposed here—although the results are not very different—is not an addition of 7s 6d. to the regional employment premium in development areas but that, as a result of the alteration of the exchange rate, it is no longer necessary to provide in most areas the advantage previously provided.
That does not mean that it is clear that the advantage is no longer required in development areas. Indeed, we are seeing that it is and continues to be required there. The simple reason is that, in the development areas, broadly, unemployment is approximately twice that of the rest of the country. So if one puts this matter into its proper context, my hon. Friend will agree that there is every reason for not withdrawing an economic advantage to the development areas under S.E.T., because those areas suffer so many economic disadvantages, as is demonstrated by their unused resources and unemployment figures.
I turn now to the details of my hon. Friend's suggestion. He said that this is a probing Amendment, so I am anxious to give him all the information he wants. He referred to East London and said that that is now claimed to be a grey area. I am not sure whether he had his tongue in his cheek when he said that, but I accept it as a straightforward comment. It is true that areas all over the country are being claimed as grey areas simply

because there is no definition of such an area; the characteristics of what are held to be grey areas vary enormously, including such totally different characteristics as are to be found in the area of East London which he obviously had in mind.
There is really no such thing as a grey area. What my hon. Friend has in mind are areas of widely differing characteristics, whose unemployment rates are not on average worse than those in the whole country and which therefore are not, on average, as much as half the unemployment rates of the development areas.
My hon. Friend was concerned about what is and is not a demand on resources and that therefore public expenditure is being incurred by paying selective employment premium but not regional employment premium. It is simply a question of incentive to use unused resources, which applies in the development areas, and as a result of which resources from elsewhere are switched into them. If there is such a switch, there is no demand on resources and vice versa. If money is poured into an area but does not result in a switch from another area, there is an increased demand on resources in the country as a whole. If there is a switch, the demand on the country's resources is not affected. That was made clear when regional employment premium was introduced. I do not say that everyone accepts this philosophy—[HON. MEMBERS: "Hear, hear."]—but that is its basis. Much encouraged though I always am by the interesting comments of distinguished occupants of the Opposition Front Bench, I return to what my hon. Friend said about East London and what is happening in Woolwich. Of course, there, we are seeing the effect of a switch of resources from a non-development area into one which is especially a development area and has special economic incentives, in view of its great difficulties. This, therefore, exemplifies what my hon. Friend was asking and the explanation which I have given.
I hope that he will agree that, although the change in the exchange rate justifies our claim that it is no longer necessary to help manufacturers in non-development areas to the same extent, it is still true that there are unused resources and, more particularly, unemployed men and


women in the development areas and that we must continue to help them. I know that this is merely a probing Amendment, and I hope that my hon. Friend will understand that, grateful as I am for the opportunity of explaining the Government's point of view, we cannot recommend the Committee to accept it.

Mr. Robert Sheldon: An assurance has been given that the regional employment premium will last for seven years. Does that assurance apply also to the Selective Employment Tax refund?

Mr. Diamond: As my hon. Friend says, an assurance has been given about the regional employment premium, which we are not discussing. But, as far as I am aware, no such assurance has been given about the Selective Employment Tax or selective employment payments. 4.0 p.m.

Mr. Ronald Atkins: The Chief Secretary has not answered the points raised by my hon. Friend the Member for Lancaster (Mr. Henig). It has been made clear that the discrimination between grey areas and development areas has been increased by the fact that the refund of the Selective Employment Tax is still payable in development areas and not in other areas. My right hon. Friend's remarks about what are grey areas are not good enough. I know that they have not an exact definition, but they are well known in the popular mind. They have been called grey areas largely because of what people have seen in these parts of Lancashire and other parts of the country, but particularly in the Lancashire cotton district.
The position in these areas is very different from the position in Woolwich. If one goes to the areas which my hon. Friend had in mind, one will see empty factories galore, slag heaps and derelict sites. Nothing has been done about them. One will see workers who have become unemployed in industries which have died in the area and which are being set up outside in development areas, with many employees in the fifties and sixties with no hope of seeing employment again. Industry is going out of the area.
"Existing unemployment" is not a satisfactory definition, because, bad as

unemployment is, it is not worse only because people are moving from the area. A large number of people are leaving Lancashire, as with other areas, which keeps unemployment down, but there is no doubt that there is all the difference in the world between Woolwich and these genuinely grey areas. The discrimination between the development areas and the grey areas has been made worse by the fact that the Selective Employment Tax refund has been withdrawn.

Mr. Joseph Hiley: I agree with most of what the hon. Member for Lancaster (Mr. Henig) said about discrimination, but I fear that the Amendment is very much of a mouse. Surely twelve months will not make very much difference to this problem.
The Government have gone a bit mad over their development area policy; it has been considerably overdone. Industries which are fortunate enough to be established in development areas have had very considerable financial advantages. There are those which are renting premises at an uneconomic rent. Their cash grants are, I think, double those of industries situated in other than development areas. They have very special terms for training their operatives. In addition, there is the 30s. to which the hon. Member for Lancaster referred.
If hon. Members are to be merely concerned with their own constituency interests, and if when one area has a concession another area clamours for the same concession, we shall have a situation very much like that of the man who decided to take a ginger beer box to a football match. It was not long before everybody took a ginger beer box, with the result that everybody was in the same position. I suspect that, when the situation dawns on the Government, they too will have to redress some of the anomalies which have been created by their extreme generosity to development areas.
I asked a manufacturer of cloth in my constituency what he considered was the effect of the 37s. 6d. a week—7s. 6d. in respect of the S.E.T. premium and 30s. in respect of the regional employment premium—on the production of cloth. He assures me that it makes a difference of 6d. on every yard of cloth produced.


This is putting the old-established businesses at a great disadvantage.
Since addressing the House a week ago, I have heard about a firm of shipbuilders in the south of England. Its trade was divided roughly into two parts. It prod aced a specialty article largely for the export market, and the other half of its business consisted of the "bread and butter" business of repairs in the shipping industry. Because of the tremendous advantages which firms on the Clyde have, it has been deprived entirely of what I call the "bread and butter" part of it; business. In order to allow it to continue the export development of a line in which it was a specialist, as a result of this unfair discrimination, it has lost the "bread and butter" part of its trade, which has had most serious effects on its ability to export the specialty article to Europe and elsewhere.
The Government have not looked far enough for the implications of a system of this kind. This is the time when they should not seek to increase discrimination between one part of the country and another. Many other parts are suffering unfairly. Something will have to be done. No doubt the Hunt Committee will make recommendations. Industry is disturbed by continuous changes of this kind. The Government have the opportunity to level things up a bit, and they can do it by trying to solve the problem of this 7s. 6d.

Mr. Arthur Davidson: I should like to make two points which I hope my right hon. Friend the Chief Secretary will bear in mind.
First, would he issue a directive or something to other Government Ministers' about an embargo on the phrase "grey area". It is an inelegant phrase. It does not describe the districts to which it is supposed to refer. Least of all does it describe the people or the countryside of my constituency and its surrounding areas in North-East Lancashire. I hope that the Government will not refer to "grey areas" in their replies in future.
Secondly, I wish to reinforce what has been said by my hon. Friends the Member; for Lancaster (Mr. Henig) and Preston, North (Mr. Ronald Atkins). The objection of those of us in areas which surround development areas—this is true of North-East Lancashire—to the premium is not that it gives an unfair

advantage to development areas, because we appreciate the need for Government assistance in development areas. What we object to, mildly, and in our usual gentlemanly manner, is that it ignores the problems of areas such as North-East Lancashire, which are very near development areas and have similar problems.
This added inducement we fear will not only encourage new industry which is badly needed in areas like North-East Lancashire to by-pass North-East Lancashire, but, even more important, it will encourage existing industrialists inside to develop outside the area. Despite what my right hon. Friend said about the change in exchange rate, the problems remain the same, even if the exchange rate has changed.

Mr. James Dempsey: I did not intend to take part in this debate, but I have been tempted to do so by the amazing references to the extreme favouritism given to the development areas established by the Government and to the so-called unfair discrimination.
I come from a development area. My constituency is a development area. Scotland is a development area. I fail to see how this so-called bias operates in Scotland. In spite of the regional employment premium, Selective Employment Tax refunds, buildings grants and cash grants for equipment, Scotland still has twice the number of unemployed per head of population than England and Wales. In my constituency, and in my part of the County of Lanark, between 5 and 6 per cent. of our insurable population is unemployed, in spite of all that the Government are endeavouring to do. We have reached the stage where we are asking the Government to do more. If anyone suffers from discrimination, we in Scotland suffer from it.
Coal and gas prices are discriminated against us. Indeed, parts of Scotland now find it cheaper to send their iron to England to be rolled and smelted and to pay the freight than to have it done in Scotland and to pay the coal charges operating there against industrialists. That is indicative that the Government are looking at the situation objectively. They are endeavouring to do what they can within the limits of their purse to try to assist those parts of the country which are suffering more than others.
I have sympathy for the grey areas—we all have—but to compare areas of impending unemployment with areas in which there is existing unemployment is not a very fair comparison. The Government must get their priorities right. I have heard my hon. Friends on this side preaching the famous saying of the late Nye Bevan that Socialism is a religion of priorities. Here is a priority for the areas already suffering from unemployment.
My hon. Friends have spoken about the difficulty of people in the 50s and 60s being able to find jobs because industries have closed down. In Scotland, one is too old at 45 to get a job. That is the policy which has been operated by many employers, both American and indigenous. It is indicative of the serious problem which confronts development areas such as Scotland and the North-East, as well as Wales.
I hope that my right hon. Friend the Chief Secretary will err on the right side, on the side of justice, and that whatever financial assistance we can give will be given to areas with increased or abnormal unemployment figures—the areas, for instance, which have more than the national average of unemployment to contend with. Those are the areas which should get the Government's priority and on which the Government should concentrate financial assistance.
We have reached the stage that we are thinking of asking the Government to set up and operate factories, because, in spite or of all the tempting inducements, industry is still not coming to Scotland as fast or as equitably as it could to give us a fairer share of the employment prospects. I therefore want my right hon. Friend to ensure that whatever he does for the grey areas will not be done at the expense of areas such as Scotland. [HON. MEMBERS: "Hear, hear."] I am happy to have the agreement of my hon. Friends. That is where we should spend the money.
By all means take care of the grey areas, but let us first spend the money where the need is urgent and then proceed to spend it in areas where the need is less urgent. All I ask is that whatever my right hon. Friend does for the grey areas—and I hope that he will help them—he will not do it at the expense

of the financial steps which must be taken if we are to break the back of unemployment in Scotland.

Mr. J. T. Price: It so happened that a few days ago I spent a couple of hours with the Lancashire and Merseyside Industrial Development Association in Wigan. Whilst I do not represent the County Borough of Wigan in this House, I represent many of the urban and rural areas stretching across Central Lancashire, of which Wigan is their pivotal point. I wish to convey as temperately as I can to my right hon. Friend the Chief Secretary, who has already commented on the Amendment, the great apprehensions which exist in the Wigan area, which is a dying coal area, where the mines and many of the cotton mills also are closed.
It might be refreshing to bring this short debate out of the realm of general statement and to quote a few figures. I think it was Bertrand Russell who said that any man who could think acutely enough could reduce any abstract idea to figures if only he thought sufficiently about it.
4.15 p.m.
My right hon. Friend this afternoon said that the South Lancashire area and the areas to which my hon. Friend the Member for Lancaster (Mr. Henig) referred have only about the national average of unemployment. Like other massive generalisations, that is only partly true. It so happens that in January, which is the latest month for which figures are available from the Ministry of Labour, the number of totally unemployed in Great Britain as a whole averaged 277 per cent. and in the North-West as a whole 2.76 per cent. When, however, those figures are broken down for Central Lancashire—although I do not want to be parochial about it—for the old cotton and coal areas, where the traditional sources of employment have dried up. in January, only a month ago. the number of totally unemployed in South Lancashire was 3.034 of, whom a very high percentage2.948–2,948—were totally unemployed males. the highest number of male unemployed in any month since May, 1963.
Therefore, when we consider male employment, which is the key employment for the traditional breadwinner of the


family, we find that the rate of unemployment in South Lancashire for males alone in January was 372 per cent. against 277 nationally and 373 per cent. in the Merseyside development area, which is the highest figure in that area for some months, marginally higher than it has been.
My hon. Friend the Member for Lancaster referred to the problem in East Lancashire, where there are what I might almost describe as dying communities, if that is not too depressing an adjective to use, where the old cotton towns have a reduced population and large numbers of empty houses, which cannot be let because the people have gone away. It may comfort some of my right hon. Friends and hon. Friends to point to relatively low unemployment figures, but the truth of the situation is that if the people who have been forced to leave their home towns and go elsewhere had not done so, the figures would have been much higher.
Without labouring the point too much, I should try to impress upon my right hon. Friends in the Government that the figure of 372 per cent. wholly unemployed male workers in the Wigan area is totally unacceptable to us. I am constantly told by industrialists and others whom I meet it the ordinary course of my journeyings about the county, part of which I represent, that the discrimination represented by 37s. 6d. premium and the Selective Employment Tax rebate of 7s. 6d.. plus the capital grant of 45 per cent. which is available in the development areas as against 25 per cent. outside those areas, is an impossible situation.
My right hon. Friend the Minister of State, Board of Trade, who is present on the Front Bench, understands the problem very well. I have often discussed it with him. I have tried my best to brainwash him. People try to brainwash me, so why should I not get a bit of my own back occasionally?
Here we have a situation in which areas which have been stripped of their traditional employment are so placed that neighbouring areas obtain the premium payments plus the 20 per cent. advantage in capital grants and it is quite impossible to get my development of industry on the perimeter, for example, of the Skelmersdalf new town. Industrialists tell me that they cannot hold engineering

labour, for example, in some places. I do not want to sound alarmist or to be unfair to my hon. Friends who have a difficult problem on their hands.
It is time some of us in this House joined those who have said on other occasions that they regard the Selective Employment Tax and what has flowed from it as complete nonsense—complete nonsense. Let it be on the record. I have always been concerned about these devices which very often appeal to the academic mind. I am not anti-intellectual—I am rather the opposite, if it comes to that—but I am shocked that some of these boffins can sell these ideas to a Government with a radical, Socialist background.

Mr. John Peyton: But that is why they do.

Mr. Price: Let us be fair. I am trying to be fair to everybody. I do not want to be offensive to anybody. But this is an extremely difficult problem. The general proposition of the development areas, of trying to spread out industry where it is most needed, is sound in principle, and the Government have no power to direct industry except by positive or negative incentives—or discriminations, as the case may be. I can understand the argument. Bless my soul, I have been arguing this since I entered the House 17 years ago.
There is still a great deal of tidying up to do. Whatever the Hunt Committee may say when it reports, the fact is that there are still strips of Lancashire which are desparately short of employment because of the collapse in the cotton and coal industries. We want a different outlook on this, and I hope that the Government will give further consideration to the grey areas—as they are often wrongly called, for I agree with my hon. Friend the Member for Accrington (Mr. Arthur Davidson) that we ought not to call them grey, and the people in them are very cheerful. However, we ought to reduce the gap which exists between the conditions in those areas and others, and the problems of the grey areas are manifest to everybody who has lived with the situation. We want to get a good deal of liberalisation in these policies so that we do not get into the difficulties of discrimination, which already exists.

Mr. Peyton: I think someone on this side of the Committee should rise immediately to thank the hon. Member for Westhoughton (Mr. J. T. Price) for his speech. It is not the first time in this Session I have had occasion to do this, and I would like very sincerely and warmly, without, I hope, embarrassing him, to praise his common sense and his sense of realism.
I would wish him well, but I think he was a little optimistic in suggesting that he might successfully undertake the task of brainwashing Treasury Ministers. We know very well how impossible that is. Treasury Ministers are already under the influence of the boffins to whom the hon. Gentleman alluded. I would exclude the ordinary Treasury officials from this, but the hon. Gentleman went on to ask how these boffins sell such ideas to Ministers and said that he could not understand their success. The hon. Gentleman must really remember that this Government bought this absolute tomfoolery and bought it very readily. It has taken them and some hon. Members a very long time to catch up with the rest of the country in the conviction which started after the mad idea which never had any sense in it of this Selective Employment Tax. I absolutely share the hon. Gentleman's sense of shock that anyone so intelligent as the Chief Secretary should ever find himself in the position of being able to defend such monstrosities as those in the Selective Employment Tax.
The one point I want to make—it in some way echoes points which have been made by hon. Gentlemen opposite—is that the idea of development areas was all very well when it started a long time ago, but really so many things have happened since, even under the present Government, who do not really change, except when they occasionally produce a monster such as the Selective Employment Tax. What they have done is to spread the development area idea far too thin, so that really very few people get any conspicuous benefit from it, and there are many areas which also need this help and are denied it simply because they do not qualify under the rule. If the Committee will forgive me for mentioning the West Country, why should it not share widely in the advantages of being a development area? But it does not do so. I personally believe that a far

more modern and up-to-date approach is needed for areas with special problems, and for goodness sake let us accept as a start that one point at which the Government can always help is that of the infrastructure of a community, rather than bribing industry to go to places, so that they can become commercially and economically profitable.
I do not wish to detain the Committee any more, except to finish as I began, by thanking the hon. Gentleman the Member for Westhoughton for a very welcome outburst of common sense from those benches, an outburst in which he eloquently and with conviction condemned a really monstrous and silly proposition.

Mr. Henig: I apologise to the Committee for taking up more time, but in answer to my probe my right hon. Friend, although, with his customary courtesy, he dealt with some of the points I made, did not, I think go far enough. May I, therefore, probe this a little bit deeper?
I should like to make it quite clear to my hon. Friend the Member for Coat-bridge and Airdrie (Mr. Dempsey) that nobody who has spoken in favour of this Amendment, so far as I am aware, would begrudge for one minute any help whatsoever going to areas like Scotland which have suffered so appallingly in the past. The only point we want to make is this: are the Government really sold on the idea that the only way to give help and to alleviate suffering in Scotland is by causing it somewhere else? If this is the proposition then I am perfectly prepared to consider it, prepared to consider Lancashire and London and other places which may have had no share in the past and say, "Let us share out the suffering more equitably", but I would hope that my right hon. Friend, who is so subtle and sophisticated in these matters, would not want to offer that particular argument to the Committee this afternoon.
Right at the beginning of my right hon. Friend's reply he said that it was not quite the same thing as increasing the regional employment premium to introduce this selective employment premium differentiated between different areas of the country at 7s. 6d. Could he explain this? Where is there any difference between 37s. 6d. under one piece of


legislation, on the one hand, and, on the other hand, 30s. under one piece and 7s. 6d. under the other? Does 30s. plus 7s. 6d. net equal 37s. 6d.? Would he explain this? I can understand the administrative reasons why my right hon. Friend needs to do it this way, but I do not see what is the virtue of it.
He referred, secondly, to the change in the exchange rate of sterling, implying that it meant that areas outside the development areas no longer needed 7s. 6d. I never fully understood, I must confess, how the premium was supposed to help exports when given to all sorts of people who have never done any exporting in their lives. That is, I suppose, the old argument which we cannot enter into now, but I would like to assure my right hon. Friend of this, that there are many areas of the country which still need help despite the change in the exchange rate, which is somewhat incidental.
My right hon. Friend suggested that there were unused resources in the development areas. This is simply not true. There are many unused resources in many other parts of the country. Something was said about employment, and I made a quick check, and I find that in tae last five years the total number of people registered as employed and unemployed in the area of Lancaster has dropped by 1,000. Why? Because they have gone elsewhere.
There are other places outside the development areas where there are unused resources. This means that, if we are to continue to pay 7s. 6d. per week per employee in these areas, where there are no unused resources, we shall not be spending. It would appear to follow that ceasing to pay 7s. 6d. would similarly not be a real saving. In other words, the saving of£75 million seems to me to be completely mythical. Could my right hon. Friend explain that one? The hon. Member said I had produced a mouse. I hope that he will realise that there are certain difficulties in framing an Amendment which will be in order so that we can have a debate of the kind that we have had.
I have mentioned the problem which the Clause will create for my constituents. I do not like the idea of each of us asking, "What about my constituency? What will the Government do about

that?" But I want to hear from the Front Bench how the Government consider that this kind of measure and Clause will solve the real problems. Why was the premium 30s. before, and why is it 37s. 6d. now? When will it be 45s.?
4.30 p.m.
I return to the basic question. The Hunt Committee has been established to consider the problem of the grey areas and has been working on it for six months. In three months' time, before it is due to report, there will be a complete change in the discrimination between grey areas and development areas. Has my hon. Friend contacted the Hunt Committee to see how this will affect its work? Will it have to start again on the basis of the extra 7s. 6d.? Was it informed in advance that this would come? What evidence is there that the 30s. premium has failed, making it necessary to have a premium of 37s. 6d.?

Mr. George Lawson: I support the Clause. I understand that the Government are resisting the Amendment and are seeking to carry on with their comparatively new policy of seeking to assist certain areas. It may be that some of the provisions are not ideal, but we must recognise that we do not devise ideal measures right away. We grope towards better and better methods of dealing with certain problems.
Hon. Members on both sides of the Committee have paid lip-service to the existence of the problem arising from the fact that, left to itself, industry drains away from certain parts of the country. It does this not just because certain parts are superior to others but for a variety of other reasons. Perhaps because large centres of population can provide more amenities, and so forth, industry has tended to drain towards those centres, and other parts of the country have been left at an increasing disadvantage. It had become increasingly apparent to many of us that unless the Government intervened in a massive, sustained and systematic way, this process of draining away to areas representing, perhaps, only one-third of our total area, would continue.
Hon. Members on both sides of the Committee have urged the Government to take steps to rectify this maldistribution of industry and have put forward


strong views on those lines. I hope that the Government will continue with this kind of Measure. I am not arguing that, at this stage, the provisions in the Bill are necessarily the best; I am prepared to see other methods being sought. But at this stage the Bill offers one of the best solutions.
So long as it does not affect my hon. Friends they are apparently prepared to pay lip service to this method, but immediately it appears to begin to bite and to affect their own areas they raise an outcry against it. I am not opposed to this kind of provision. Industry has drained away from my part of the country, and youngsters who are unable to find jobs in their own areas have had to go to London. Sometimes they have been almost children, who have had to leave their own areas because there were no jobs for them there.
It would seem to me that hon. Members representing not merely areas in Scotland but any peripheral areas in this quite small island ought to be encouraged by the measures that the Government are putting forward. They should welcome them. It may be that in some instances they can be refined, but at a time when they are just beginning to work I am opposed to hon. Members representing areas which have had it all their own way for so long bringing pressure to bear on the Government to scrap their proposals.

Mr. Arthur Davidson: How can my hon. Friend say that areas such as Lancashire have had it all their own way for years and years? Does not he know that there has been a drift from Lancashire for years and that during the past 10 or 15 years coal mines and cotton mills have been shutting down? He cannot compare the position of Lancashire with that of London.

Mr. Hiley: On a point of order. This is the first time that I have ever raised a point of order, Sir Eric. Is it appropriate for an hon. Member who has not heard the debate to speak about it in terms which obviously incur the wrath of his colleagues? Is it not wasting the time of the Committee?

The Chairman: Any hon. Member must decide for himself whether he has

heard sufficient of the debate to justify his making a contribution.

Mr. Lawson: Thank you, Sir Eric. This is a theme about which I have spoken for many years. I know it very well. I am talking about central areas which, over the years, have attracted industry. I am aware that some are more fortunate than others. Some may be described as grey areas. I am prepared to see methods brought forward to help them. But the kind of campaign that is being mounted in this case seems to me to be designed to stop any measures from effectively biting.

Mr. Henig: I have every sympathy with the problems of Scotland. In my Amendment, or in any other action I may take, I am not attempting to reduce the amount of help that is already being given to areas such as Scotland and the development areas. I am concerned with the extra 7s. 6d. which is now proposed because I believe that it will have a deleterious effect on other areas.

Mr. Lawson: I accept what my hon. Friend says, in part, but I come back to the fact that just at a time when these measures appear to be beginning to bite an outcry is raised which in some cases has taken the form of saying, "Surely, in order to help Scotland and other areas, those areas which are nearer to the centre ought not to be penalised." If, as a result of recent reorganisations, it is necessary that certain factories should be closed down it would seem to me more desirable for those factories to be closed in areas where there is relatively more alternative employment rather than much less alternative.
If the result of this extra 7s. 6d. on top of the regional employment premium, as it has been operating, is an important factor in deciding whether a factory will close or remain open, it would seem to me that the proposals in the Bill will perform a very useful job. I am behind the Government in the job they are doing, and I hope to continue to be behind them in this policy.

Mr. Diamond: I am sure that the Committee wishes me to reply shortly to the additional points which have been made since I last spoke. I apologise for having replied at that stage, but it did not then seem that any other hon. Member wished to speak on the Amendment.
I am grateful to my hon. Friend the Member for Motherwell (Mr. Lawson) for his very moving speech and I am also grateful to my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dmpsey). Development areas have been suffering greater unemployment than the rest of the country for so long that they have come almost to accept it as part of their lot. I do not accept it for one minute. A Labour Government must intervene in the economic affairs of the country so as to create greater justice. This is a fundamental way of doing it—of encouraging industry to move into the development areas so as to achieve nearer to a balance of economic activity in terms of full employment by comparison with that which other areas have enjoyed.
My hon. Friend the Member for Motherwell is quite right. The attacks which have been made on the Selective Employment Tax and the regional employment premium have been based on the allegation that they do not work. Now, when we see them beginning to work, it is obviously the duty of hon. Members whose constituents are prejudicially affected to draw that fact to the attention of the Committee. I well understand that. But we must recognise that the function of these two Acts taken together—and that is why we are resisting the Amendment—is to encourage the movement of industry into the development areas so that when a greater level of activity has been achieved generally, then that greater level of activity can be enjoyed in the development areas, too.
This has been prevented in the past because in areas of full employment there has been what I can only describe as overheating, boiling over in terms of economic activity, while in other areas of. the country there have still been freezing conditions, economically. The way to enable a higher level of economic activity to be achieved is to secure a greater equality of activity between different area, particularly in terms of employment or in the absence of unemployment.
This is a marked differential. The hon. Member for Pudsey (Mr. Hiley) made an interesting speech on Second Reading—and he referred to the matter again today—in which he said that in terms of cloth manufacture, the differential was excess ive He said that it is having a marked

effect on certain orders which might have gone to some of his constituents but which, in fact, will go to manufacturers in development areas.
We have to recognise that this is what it is all about. This is why we have the differential. My hon. Friend must share the view so well expressed by my hon. Friend the Member for Coatbridge and Airdrie that whatever we do we should not take away from the development areas. If we all accept that premise, then the question put to me is: what are the Government doing to help areas which I may not describe by the colour of the sky but which I may perhaps describe as intermediate areas?
We have recognised that in the intermediate areas there is a problem which needs special investigation. The level of unemployment in the intermediate areas as a whole is broadly the same as the level throughout the country, but it varies enormously from area to area. Indeed, the level of unemployment varies in the development areas, too. It is no good comparing the level of unemployment in one part of a constituency or one part of an area with the general level of unemployment in the development areas because certain parts of the development areas have a very high and acute level of unemployment.
In answer to my hon. Friend the Member for Lancaster (Mr. Henig), I would point out that that was why we set up the Hunt Committee. They are doing their job. They are aware of the changes which are taking place and conscious of everything which is going on. I am sure that they read my hon. Friend's speeches with great care, because they are relevant to the points which the Hunt Committee are considering. They will note what he said about the speed with which they are carrying on their difficult task. It is for them to decide how fast they can usefully go in carrying out their important task. As a Government we, naturally, are anxious to hear the results of their inquiry when they are available.

Mr. Henig: I do not think that my right hon. Friend follows the point which I made. I appreciate that the Hunt Committee have been set up and that they will make their recommendations. But I cannot understand—it must be my fault


—how one can first set up a Committee to inquire into what positively needs to be done to help the intermediate areas and then, a few months later, do something which positively injures the grey areas once more. How was that decision taken? What is the point of having a Committee sitting on this subject if in the middle of it something is done which changes the whole basis of their study?

4.45 p.m.

Mr. Diamond: My hon. Friend misconceives the position. The division is between the development areas and the rest of the country. We are preparing to save in a full year£100 million of public expenditure by withdrawing the S.E.T. additional payments from manufacturers outside the development area. No distinction is drawn between the intermediate areas—my hon. Friend does not like them called the grey areas—and the rest of the country, other than the development areas. I therefore cannot accept that we are taking deliberate steps to prejudice the intermediate areas. That is far from the case. We are proposing to continue to help the development areas. The evidence is that the help continues to be needed. The Amendment would go against that, and therefore I must recommend the Committee that we should not accept it.

Mr. Henig: Does my right hon. Friend consider that this Clause simply continues help to development areas or will he not at least agree that, in effect, it increases that help as against all the other areas of the country and in a way in which those of the remaining areas with least natural advantages will suffer most?

Mr. Diamond: I think that I have answered my hon. Friend's question on more than one occasion but I am anxious, if possible, to satisfy him. I will therefore repeat that we are proposing to save£100 million of public expenditure, which is very relevant in our present considerations and extremely relevant in terms of increasing economic activity in the country as a whole, including Lancaster. We propose to do that by removing the additional selective employment payments from areas other than development areas. We are not proposing to withdraw them from the development areas because, in spite of

everything which we are doing for those areas, we are not satisfied that they can at present withstand such a withdrawal of assistance and of incentives.

Amendment negatived.

Mr. lain Macleod: I beg to move, Amendment No. 2, in page 1, line 17, leave out 'wholly'.

The Chairman: It would be for the convenience of the Committee to discuss at the same time the following related Amendments:

Amendment No. 3, in page 1, line 23, leave out 'wholly'.

Amendment No. 4, in page 2, line 4, leave out 'wholly'.

Amendment No. 7, in page 2, line 43, leave out 'wholly'.

Mr. Macleod: As you say, Sir Eric, there are three consequential Amendments to the Clause.
I am not particularly devoted to the Amendment, unlike some to which we shall come on Clause 2, and it is most unlikely that I shall invite my hon. and right hon. Friends to divide on it. But I should be grateful if the Chief Secretary would clear up one issue. The Clause withdraws part of the Selective Employment payments outside the development areas and it refers to the Selective Employment Payments Act, 1966. For our immediate purposes that Act is not relevant because it applied to the whole country whether the area was a development area or not. The question whether an area was wholly in or wholly out, or partly in or partly out, was therefore not particularly relevant. One has to look then at the regional employment premium which was finally embodied in Clause 26(1) of the Finance Act of 1967. There the word "wholly" is used.
My point is quite simple. Leaving aside altogether the merits of S.E.T.—and here I agree very much with what was said by the hon. Member for Westhoughton (Mr. J. T. Price) and with the comment of my hon. Friend the Member for Yeovil (Mr. Peyton)—one had to find a fairly rough and ready method of classifying establishments. With all its faults, the only means available was the Industrial Classification, for which I think I was myself responsible when Minister of Labour about 10 years ago.
The problem that can or may arise in this case is where the development area cuts through part of an establishment. Normally, if I have it right, an establishment consists of activities carried on at the same address, and the Minister of Labour has, on the whole, been extremely sensible in deciding the many difficult problems of location that arise from that definition.
Does the Chief Secretary need the words
…wholly within a development area…
repeated four times? May there not be cases in which that has the undesirable effect of withholding a payment from an establishment which is mainly—or, indeed, almost entirely—within a development area, but may have one small part—an accounts department, say—down the road geographically but, in the curious way we have our boundaries, very conceivably in a different county or county borough, as the case may be? There must be illustrations of this, and I should have thought that they would have come to the notice of the Minister of Labour or the right hon. Gentleman.
I have paid tribute before to the way in which the Minister of Labour has coped with the difficult questions of definition that arise, but as I looked through the Bill from the point of view of Amendments in Committee, I was struck with this word. It occurs to me—the point is obvious, and I need not labour it—that although the establishment may be almost entirely within a development area, one part—perhaps an unimportant part—may lie outside and, according to the way I read the Bill, that fact might disqualify the whole of the establishment from receiving the premium. I should be grateful to have the Chief Secretary's comment.

Mr. Diamond: I am grateful to the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) for raising this point, because it needs to be made clear. He refers to the possibility of an establishment being mainly within a development area but having, for example, an accounts department in a separate office down the road. He has asked me whether we have had examples of works straddling the two areas. Furthermore, he asks what principle we are applying.
We require the word "wholly". We are applying the principle that is behind the word. We have had only one example, and it has not presented any problem because the geography has been very much of the kind that the right hon. Gentleman has just mentioned. The right hon. Gentleman was good enough to say that the Ministry of Labour has acted wisely in these matters, and he knows that the Minister has a discretion with regard to the defining of "establishment."
In the case that has occurred—and in the case of the theoretical accounts department to which the right hon. Gentleman referred—the Ministry of Labour has regarded—or, in the right hon. Gentleman's case, would regard—the main establishment which is wholly within the development area as one establishment which would rank for the additional sum, and any smaller, separate office on the other side of the road—the "road" being the boundary; and, in the right hon. Gentleman's case, the office being the accounts department—as being a separate establishment which, being wholly outside the development area, would not rank. Therefore, the firm in question is not prejudiced at all, because the main part of its establishment which is in the development area ranks for the additional payment.
Having dealt with the one example and with the method of dealing with the right hon. Gentleman's example, let me now turn to the theory. The right hon. Gentleman is much more experienced in these matters than I am, and he knows that wherever one draws a line one has difficulty. In theory, the question is: is it right to exclude those firms which might exist—though only one has con_ to notice, and that has not presented a problem—which have their main establishment in a development area, but have, as it were, put their toe into the non-development area and, because of the word "wholly" lose the total advantage?
Perhaps I might put it the other way round. Equally, one has the problem of the firm which is mainly in a non-development area and could, without these words, seek to gain advantage for the whole of its establishment in the non-development area by putting its toe, as it were, into the development area and


seeking to get classification as one establishment—putting an office on one side of the road, building a bridge across the road, and then saying, "We are one establishment." As I say, one always has difficulty with a dividing line and this dividing line is consistent with all the other relevant dividing lines.
The right hon. Gentleman mentioned the regional employment premium—that is the dividing line used there, and it is also the dividing line used with regard to Board of Trade legislation in helping development areas. That being so, and having regard to the need for consistency and the fact that only one example has come to notice and that that example in practice has presented no real problem, I hope that the right hon. Gentleman will feel his Amendment has served the very useful purpose of clarifying the situation but need not be pressed further.

Mr. Peyton: The whole Committee will be grateful to the Chief Secretary for the trouble he has taken, but I should like to make just one or two points. Leaving aside the fact that I am against S.E.T. and all its work, and abominate it, it seems to me to be most undesirable that because of the accident of yards, a very small measurement being involved, one firm suffering from the same disadvantages of terrain, bad transport conditions, out-dated industry, and so on, could be very severely prejudiced as against its competitors facing the same conditions and obstacles.
My second point is a slight refinement of the first. One firm might be able to cure itself of its disadvantages by selling off a quite unnecessary or not vital part of its establishment, and thereby putting itself wholly within a development area. On the other hand, a similar cure might not be available to its neighbour who, as
I say, is suffering from the same problem.
5.0 p.m.
I raise a serious point arising out of the right hon. Gentleman's answer to what was said by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). The Chief Secretary justifiably commended the Ministry of Labour for its immensely detailed and careful work in dealing with these difficulties. I agree with and endorse that commendation very strongly, but we have to face the

fact that the Chief Secretary appeared to be saying that there was vested in the Department a discretion to disregard words in an Act of Parliament. That is a very serious matter. Parliament should not be so sloppy in its legislative habits as to say, as apparently we shall say, that in this Clause there is something that we do not completely mean.
I wonder whether we are setting a dangerous precedent. It is all very well if only one firm is involved, but one knows from experience of these things that problems and complaints are likely to come some time afterwards. To put it politely, people are slow to appreciate the extent of legislative folly in which we sometimes indulge, and only when they meet the impact do they realise, dumbfounded and amazed, that Parliament has done an incredible thing. They do not always lightly forgive Members of Parliament who have done so at the behest of an Administration which has got itself tied by the heels with a stupid proposal such as Selective Employment Tax.
Bearing in mind that the Chief Secretary could not give an undertaking that there will not be other firms in this position, I ask him to address his mind to the question whether it is wise for a Minister to say that although we have the words "wholly within a development area", nevertheless a kindly and benign Administration, through the Ministry of Labour, would easily be able to overcome a difficulty such as that by a sensible and generous exercise of a discretion which we have not written into the Bill.

Mr. Diamond: I gladly reply to the hon. Member for Yeovil (Mr. Peyton), although very shortly. He has referred to a discretion which is embodied in the Selective Employment Payments Act, 1966, in Section 10(3), which says:
The Minister by whom any register of establishments is maintained… may if he thinks fit on the application of an employer—
(a)treat different parts of premises occupied for the purposes of his business by that employer as constituting the sites of different establishments; or
(b)treat different premises so occupied as constituting the site of a single establishment.
I recognise the democratic spirit behind what the hon. Member said and the fact that we do not want too much


power vested in Ministers who in turn have to delegate that power to others, but this matter was fully discussed at the time. He will realise as a practical man that it is quite impossible to provide in legislation exactly how we should divide different workshops and offices of innumerable kinds which constitute a problem. The sensible way, therefore, is to achieve justice as far as we can by giving an element of discretion to the Minister who is answerable to Parliament. I am glad that the hon. Member and his right hon. Friend feel that the Minister is exercising his discretion wisely.

Mr. Iain Macleod: The two points made by my hon. Friend the Member for Yeovil (Mr. Peyton) are of great importance, but I am afraid that neither of them can be met under the Selective Employment Tax as we have it. That is an additional reason for getting rid of the tax. The difficulty about an establishment is that it might be only a few yards from a development area, but it might be 100 yards away or half a mile away and so on. It is true that we agreed to a certain discretion a year ago. Although I am wholly sympathetic in principle to what my hon. Friend said and he and I believe that a tax like this is a nonsense, it makes it less of a nonsense if a certain amount of common sense can be injected into its interpretation by the Minister of Labour.
I am grateful to the Chief Secretary for having explained this matter. I think that on balance he needs the word "wholly". We shall have to rely in the odd case which will crop up on the discretion which we hope and believe the Minister of Labour will exercise wisely. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. Henig: I wish to make one or two brief points, partly because some of the reservations expressed earlier in the debate and on Second Reading have never been adequately met. This Bill falls into two parts. Clause 1 is quite self-contained, and Clauses 2 and 3 are quite self-contained, even though the latter contain two things. The rest of the Bill could continue if Clause I disappeared,

which I would think no very bad thing.
The object of Clause 1 is to make an increase in the amount of economic help given to some parts of the country as against others. I do not think anyone would deny this. A question remains which has not been answered by my right hon. Friend the Chief Secretary. If he cannot answer it, I hope he will say so, but if he can answer it I hope he will give us the answer. How was it that the previous amount of help could be held to be insufficient so soon, necessitating that it be increased? When was it known that 30s. was inadequate? How was it established that 37s. 6d. is adequate, and have we a firm pledge that in a few months my right hon. Friend will not come back to us asking that it should be made 45s.?
This Measure was announced originally last November as part of the savings consequent on devaluation. In fact, there was a muddle and we were told that we no longer needed the S.E.T. premium for three-quarters of the country because with devaluation our exporting problems would be solved. It was held that the S.E.T. premium was somehow or other a help to exports—an argument which I never followed. It was therefore removed. The second thing which seems to have been confused is that this is part of the savings which have been effected. If the areas in which the premium was given—the regional employment premium or S.E.T. premium—were those in which there were no unused resources, then this was spending, but if there were unused resources this meant a lot of saving. Perhaps my right hon. Friend will admit that the savings which this proposal is supposed to yield amount to a figure very much more apparent than real.
On my reservation about Clause 1 I part company with hon. Members opposite. The Clause seems to me S.E.T. and regional employment premium legislation in a worse mess than ever before. I understand that the Opposition support the Clause because they think that it removes some of the anomalies. I believe that it creates far more anomalies than it removes.
Help is given to development areas and to people in those areas under two separate Measures—30s. in one case, and a less significant but still substantial


amount of 7s. 6d. under the Bill. The brunt of this is being borne by service industries outside development areas. There is the ludicrous position that in a development area manufacturing industry benefits at the expense of service industries, so that hotels in the Highlands may be subsidising industry for the Highlands. This may be logical, but the logic escapes me.
I ask my right hon. Friend the Chief Secretary to recognise that, the Government having taken decisions for specific purposes at specific times, there is now a certain amount of legislation on the Statute Book which, together with the Clause, makes up the regional employment premium/S.E.T. legislation. I want my right hon. Friend to recognise that there is no logic in this and to agree that the Government will look at the whole thing again and consider whether perhaps, after all, they have not committed under every conceivable circumstance the country to paying regional employment premium for seven years. I ask them to look at the matter again, to study how it will affect people, and to agree that this will be the last occasion on which they come to Parliament to tamper with a little more of the R.E.P./S.E.T. structure, until the day comes when they have a brand new plan to replace it.
I have the gravest reservations about the Clause, but if my right hon. Friend can go some way to alleviating my concern on this point I have no doubt that, like other hon. Members, I shall accept it.

Mr. Hiley: It has been demonstrated that many hon. Members believe that development areas enjoy an unfair advantage over other areas which are not so fortunately placed. The Chief Secretary referred to the speech I made last week. The points I made in that speech were not dealt with by the Government spokesman when he wound up in that debate. I feel even more strongly on this issue than I do over the general consideration of which areas should be designated as development areas.
I want to refer to industries which have been established for a long time and which quite fortuitously find themselves in an area which is now designated as a development area. I concede that

people who start from scratch in a development area incur many risks and high costs in establishing themselves in a new area where there is probably no industrial tradition and which is probably the sort of area which most of us used to envisage as a development area. I have in mind places where there is probably a coalmine or two but no experience in manufacturing work. I concede that those who go into development areas on that basis, require, and rightly receive some consideration.
This does not apply to industries which have been established for a very long time. Probably the trouble here is, not only that the Government have been too lavish in their aid to development areas, but that they have been too haphazard in their selection of development areas. It is manifestly unfair to take a whole country such as Scotland, which contains all sorts of long-established industries, and give those industries all these advantages at the expense of their competitors in other parts of the United Kingdom.
I have tabled an Amendment which, unfortunately, has not been called. I should like guidance as to how best to appeal to the Chief Secretary to give some consideration as a special case to industries which have been long-established. The seven years for the regional employment premium may be considered sufficiently long for such industries to enjoy these advantages. I would not mind if it were 10 years, or even 15, because the people to whom I have been referring have been established for far longer than that.
This is a great injustice to those firms and it will be accentuated by the addition of this 7s. 6d. I am not speaking on a purely constituency basis. This refers to the whole of the non-development areas, in which many people will be seriously affected. It is wrong that an additional burden of 7s. 6d. per week should be put upon them. I hope that I have impressed upon the Chief Secretary the injustice which is being done in this case.

5.15 p.m.

Mr. Sheldon: The hon. Member for Pudsey (Mr. Hiley) drew attention to some of the unfair competition which can result from this donation. I would have no objection if it could be conclusively shown that this was an incentive rather


than a donation. For it to be an incentive it is not sufficient that it be given to a firm which at present employs a certain number of workers. It must be given to a firm which, because of this incentive, will increase the number of workers it employs. This is the whole purpose of the Selective Employment Tax refund, as I understand it, and of the regional employment premium.
The difficulty is that nobody has any real conviction that this will go for the whole time required to enable people to plan ahead and create the factories and jobs necessary to take advantage of this commitment. As my right hon. Friend the Chief Secretary said earlier, there is no commitment as to the future of the Selective Employment Tax refund, and therefore there is no future as to its incentive effects on people to try to increase the numbers they employ to take advantage of this. To enable people to make the plans, to lay in materials, etc., a number of years is needed. This was clearly accepted in the case of the regional employment premium. Therefore, this 7s. 6d. which is being given to manufacturers in development areas is virtually a donation.
It can be said that this will result in an extra profit to the manufacturers. Those who are not against all kinds of profits might accept that this is not necessarily a bad thing, but it is clearly wrong for the Government to increase or main. tam taxation to provide this kind of indiscriminate dole. We are becoming utterly confused between the incentive effects of increasing employment in the regions, which is wholly admirable, and giving a donation to manufacturers in development areas, which is not admirable.
I only hope that the donation has, at any rate, been reduced by the Clause in that we have reduced the areas in which it is to be given. I hope that this is a halt on the way to its ultimate abolition.

Mr. Peyton: It is not always—indeed, it is not very frequent—that I find myself in sympathy with Treasury Ministers. I: has not happened in recent years. Yet, when the Chief Secretary was being addressed by the hon. Member for Lancaster (Mr. Henig) I found myself more and more sympathetic to the right hon. Gentleman, warmhearted towards him,

sorry for him in the difficult rôle he has to perform, and almost embarrassingly on his side.
The hon. Member for Lancaster lectured both his right hon. Friend and the Committee on the evils of this proposal and of the Clause. The hon. Gentleman announced, to my great relief and satisfaction, that he parted company with this side of the Committee even more emphatically than he parted company from the Chief Secretary. Although I wish nothing good to the hon. Gentleman, nevertheless I rather dread the day when I find myself in serious agreement with him on a problem of this kind, because I shall then be not only suspicious but wholly certain that I am in the wrong.
I very much agree with what was said by my hon. Friend the Member for Pudsey (Mr. Hiley) about the benefits of development area circumstances being denied to many who would not only like them very much but might benefit from them considerably. One of my objections to the whole of this system is that it is administered by a Government machine which is slow-moving and ponderous, which is immensely convinced that it is always right and most reluctant to change the pattern of the past in any way, the consequences of this sort of process being disastrous for the country as a whole and highly prejudicial to that dynamism which the Prime Minister, in his days of credit, once prophesied he would bring to this country.
To take an example—again, I am not making a constituency point here—there are serious needs in the West Country. I do not suggest that these would be met by the main development area scheme, but what we badly want there, as elsewhere, is a considerable improvement in the infrastructure of the whole community. If the Government would only do the things which no one else can do, provide the roads and the training facilities and improve transport instead of making a muck of it, we should be very glad. But we fear this pattern from the past which is imposed and sometimes extended as misfortune strikes one area so that the development area system is spread, and with that spread the prejudice against other areas not covered is increased. The time has come to undertake a careful review of the whole system.
I agree with what my hon. Friend the Member for Pudsey said about our continuing advantages for ever to concerns which may not necessarily deserve them. I am sorry that the Amendment which he put down has not been selected for discussion because I think that it enshrines an important principle, although it may not be strictly relevant to this Bill. I am sorry that the Committee did not have a chance to pursue the point which my hon. Friend raised. What I fear here is the danger of giving subsidies to bad concerns and to concerns which are really just kept afloat by them and not helped to develop as they should.
The hon. Member for Ashton-under-Lyne (Mr. Sheldon) referred with great innocence and frankness to the disastrous confusion between incentive and donation. I warmly agree. We can see the pathos of it as hon. Members opposite begin to understand the confusions to which their claim to omniscience has led. They told us that they would plan this and organise that, but they made what is only a human mistake—

Mr. Sheldon: I cannot claim naivety since I was against the Green Paper at the time when hon. Members opposite refrained from voting against it.

Mr. Peyton: Very well; the hon. Gentleman can have his debating point not once or twice but many times. The point I make is that, by and large, hon. Members opposite believe that the Government machine is a highly competent affair which smoothly discharges and puts into effect even the most elaborate plans. Let us make the quite unjustified assumption that the Government's plans are right. Nevertheless, it is totally impossible—

Mr. Joel Barnett: Mr. Joel Barnett (Heywood and Royton) rose—

Mr. Peyton: No—it is totally impossible for the administrative machine to put its plans into effect. What I find impressive, and perhaps something of a relief at last, is that dawning upon the consciousness of hon. Members opposite now is a realisation that they may have bitten off a good deal more than they can chew.

Mr. Diamond: If I may say so, the speech of the hon. Member for Pudsey (Mr. Hiley) answered the speech of my hon. Friend the Member for Lancaster (Mr. Henig). If my hon. Friend fails to understand my answers, oft repeated in my humble way, he may understand more readily the answer given by the hon. Member for Pudsey. The hon. Member for Pudsey referred to what he called the unfair advantage over other less advantageously placed areas which the development areas enjoy. He returned to the same theme several times. It is his belief that those old-established firms which have been carrying on a satisfactory business now find themselves against a new competition engendered by the help given to development areas.

Mr. Hiley: The right hon. Gentleman has got it the wrong way round. I am complaining about the advantages which long-established firms in development areas are enjoying at the expense of their competitors outside.

Mr. Diamond: I understood the hon. Gentleman to be referring to an old-established firm, which I foolishly took to be in his own constituency.

Mr. Hiley: No. I am not a single constituency man.

Mr. Diamond: I am sorry. I was misled by some of the speeches into thinking that constituency matters were uppermost in some minds. I now understand that the hon. Gentleman was referring to an additional advantage enjoyed by firms in development areas. The point is exactly the same, and it answers the question put to me by my hon. Friend the Member for Lancaster. My hon. Friend asked why it is that the regional employment premium, that is to say, an incentive which enables a manufacturer only in a development area to have an advantage over others elsewhere, does not create a demand upon resources whereas an incentive which takes the form of a payment or subsidy to every manufacturer in all areas does.
The hon. Member for Pudsey has given the answer. He does not like firms in development areas having advantages as a result of which firms in non-development areas tend to move or tend to expand in development areas at the expense


of expansion elsewhere or tend to withdraw their factories and their employment from regions, as my hon. Friend made clear, in South London, in order to move into highly difficult—difficult in economic terms, that is—development areas. This is the answer. It is a switch of resources. If my hon. Friend would be good enough occasionally to pay attention to what I say, he would see the point. I am sorry to put it so simply, but I have tried to answer him with my usual patience and, I hope, my usual courtesy. If, for example, he would read what I said in reply on Second Reading, or if he would read tomorrow what I have said several times today, he would see that I have endeavoured very hard to answer the question and make the matter perfectly clear.

Mr. Henig: Mr. Henig rose—

Mr. Diamond: I hope that my hon. Friend will contain himself in patience for a few moments more. Where there is a switch of resources, there is one situation. Where there is not a switch but additional demand spread all over the country, there is another situation.

Mr. Henig: The point I am making—I am not the only one who makes it—is this. What is the difference between the Government giving this 7s. 6d., or the whole 37s. 6d. for that matter, to areas in Lancashire which, massively, have unused resources and giving it to development areas which have unused resources? Why is one classified as spending and the other not? I see no difference.

Mr. Diamond: My hon. Friend makes it difficult for himself by using terms which do not describe the facts. Let us return to the facts, and let me repeat what I have already said three times. In the non-development areas, the intermediate areas to which my hon. Friend refers, the level of unemployment as a whole is the same as the level of unemployment in the country as a whole. If, therefore, my hon. Friend picks out a particular intermediate area where there is a high level of unemployment, he must contrast that with a particular area in a development area where there is an extremely high level of unemployment. He must compare like with like.
My answer to my hon. Friend, if he will stick to the facts of the case, is that

giving an incentive which results in unemployed human resources being used in development areas and therefore results in a switch of demand from one area to another is a different proposition from giving an incentive over the country as a whole for manufacturers. That is why we are continuing with the policy of assisting development areas. The Clause does not detract from the benefit to development areas. The only speeches I heard which were not in favour of the Clause were in aid of removing the benefit from development areas, and I am sure that is not the wish of the Committee. Therefore, I hope that the Committee will be good enough to allow the Clause to stand part of the Bill.

5.30 p.m.

Mr. Henig: I am sorry but I must return to the point. My right hon. Friend keeps making out that the purpose of the Clause is to continue the aid already given to development areas. Will he now at least be honest enough to admit that what the Clause does is to increase that aid? Also, will he answer, or admit that he is incapable of answering, the question that has been put to him many times: When and how did the Government reach the conclusion that 30s. was inadequate aid; why have they decided that 37s. 6d. is the right level; and for how long is it to remain the right level?

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2.

(TERMINATION OF EXPORT REBATES.)

Mr. Terence L. Higgins: I beg to move Amendment No. 9, in page 3, line 11, leave out "written".

The Temporary Chairman (Dr. A. D. D. Broughton): It will be for the convenience of the Committee to discuss at the same time Amendment No. 10, in line 12, leave out "written", and Amendment No. 11, in line 15, leave out "one month" and insert "three months".

Mr. Higgins: I think that it would be for the convenience of the Committee, Dr. Broughton, if we took these Amendments together, though the actual connection between them is perhaps rather tenuous. The first Amendment is concerned with


whether or not the export rebate withdrawal should not apply to contracts which are both written and oral, and Amendment No. 11 is concerned rather with the period of notices which those who think they are entitled to the export rebate are required to give before they are considered by the Board of Trade. Therefore, while I think there is some connection between the Amendments, it would be helpful if I divided my remarks in two.
The essence of the first Amendment is to ensure that in cases where a genuine contract has been made with regard to an export order though the contract has not been expressed in written form, the firm concerned should still get the export rebate, whereas if the Bill were passed in its present form it would be excluded from doing so. I think this a legitimate Amendment. We shall listen with interest to what the Minister of State has to say. This is a matter of considerable concern to a number of exporters who, following the exhortations of the Government about exports, find themselves in the post-devaluation period hit not only by the effect of the Government's other measures but also by the effect of the removal of the export rebate. I stressed on Second Reading that the Government had created a considerable amount of uncertainty about the whole question. We seek in the Amendment to clarify the position.
I think it true to say that the matter was partly explained in the speech by the Financial Secretary on 8th February. when he said, scpeaking about oral agreements:
So far as the Government are concerned, it is our earnest wish to include as far as we can within the rules of practicability and proof required to protect public funds, all contracts whether oral or written where there is written evidence of the contract in existence before devaluation date. We have not yet found a solution to a widening of the Clause that would give complete effect to our wishes in this regard. We shall continue independently to seek such a solution."—[OFFICIAL REPORT, 8th February, 1968; Vol. 758, c. 781.]
We also have continued independently to seek such a solution, and the result is our simple Amendment.
Our essential point here is twofold. First, the right hon. Gentleman will be well aware from his high office of the

very large number of commercial transactions which are not normally expressed in written form until some time after the agreement between the two parties has taken place. This has been exemplified in a number of our institutions, particularly those in the City of London, where the expression "Our word is our bond" is taken as the whole basis of business by those engaged in commercial transactions.
It is necessary to stress that this is not simply a question of mere business morality. It is also backed up by a very real sanction. Any of those who break their word on an agreement even though it has not been expressed in writing may well find it very difficult, if not impossible, to go on doing business with the same customers or with other customers in the market who may hear of their action. Therefore, it is highly undesirable for those in the City of London and elsewhere who engage in contracts agreed originally on an oral basis to find themselves, because of action by the Government, placed in a position where their day-to-day affairs are jeopardised. I think it is common ground between both sides of the Committee that whenever possible we should go to very great lengths to ensure that people in this position do not have the Government participating in such a way that their ordinary commercial contracts deteriorate.
Secondly, we are by no means clear from the Clause itself why the export rebate has been withdrawn. 'The right hon. Gentleman will be well aware that the original intention of the rebate—it came out clearly in the debates in 1964 and 1965—was simply to offset certain indirect taxes, particularly fuel oil taxes, the Road Fund and so on, which exporters had incurred. It was in no sense—I shall return to this point on later Amendments—regarded as a protective device. Therefore, it would be wrong if some oral agreement were invalidated because the Government suddenly withdrew the offset which they had previously given. It would be a shame if ordinary commercial relationships were jeopardised because the Government had changed their policy rather than been forced to change their policy. This is something that we ought to consider. The Government have said that


the export rebate is no longer necessary. As I say, I think they have changed their ground to a considerable extent.
Also, the Clause is far too restrictive as it is now worded. If we accept the Bill as it stands, the Government are able to consider cases only where there has been oral agreement, and even if reasonable proof were produced of the existence of such an agreement, if the Bill is not amended in the form we suggest the Board of Trade will not be allowed to give the firm the export rebate. Perhaps the Minister of State can confirm Whether that is so or not.
In particular, we need to clarify the meaning of "written agreement" within the terms of the contract. Clause 2 says:
if the relevant transaction (for cases within paragraph (a) as well as cases within (b) in brackets…is a written contract of sale".
I hope that the Minister of State will make clear exactly what is meant by:
a written contract of sale, or a sale in pursuance o a written contract of sale".
While he and hon. Members may well understand what is meant, the ordinary exporter, particularly the small exporter, may not. This is particularly pertinent because of the Financial Secretary's statement to which I have referred:
…all contracts whether oral or written where there is written evidence of the contract in existence before devaluation date.
It may well be that there is written evidence but that within the legal terminology it is not a written contract. We shall have to consider the Minister's reply before we decide what action we should take about voting on that Amendment.
Amendment No. 11 is concerned with the period of notice to be given by a firm when applying for an export rebate which it believes falls before the very early and arbitrary deadline of 31st March which the Government have now announced. Three or four points arise on this.
First, many small exporters, perhaps preoccupied with their ordinary business interests, particularly if they are taking advantage of devaluation, may not be aware of the exact conditions under which the export rebate has been withdrawn until they suddenly find the effect of the withdrawal turning up in their accounts. The withdrawal has not had enormous publicity in the popular Press

so far, and a particular exporter may well not become aware of it until there is some positive action in a case affecting his firm. How long is it likely to be before someone who is entitled to the rebate, and who should perhaps put in a claim under the Clause, will know that the export rebate has been withdrawn on an order for which he thought it would be given.
Second, it may well be that the exporter will find himself at the peak of his business in the coming months. It very much depends on what trade he is engaged in. if he is exporting to New Zealand, his exports boom may be about September, because of the Christmas trade, but there are other trades where the peak period is in March, April or May. The documentation is very complex and even if the exporter knows about the need to claim for the rebate the last thing he wants to do—or the Government want him to do—is to spend time in the middle of his peak period sending off a vast number of forms, having them duplicated, taking up his secretary's time and so on. On these grounds as well there is a case for extending the tight time limit imposed.
Third, I understand that the Government are finding difficulty in administering the claims for export rebate through the normal machinery. I understand that they are normally administered through the Customs and Excise but that the claims for the non-withdrawal of the rebate are being dealt with by the Board of Trade. That presumably means that the Board of Trade must either take on extra staff or allocate people from one Department to another to help. Surely, rather than have a rush, with a whole pile of applications snowing the Department concerned under, it would be better if they were spread over a time, with the more convenient period we suggest.
On all three grounds there is no reasonable basis on which the Government could reject Amendment No. 11, and I hope that they will accept all three.

5.45 p.m.

Mr. Peyton: I warmly agree with my hon. Friend the Member for Worthing (Mr. Higgins). I find this kind of legislation unpleasant, if not odious, and I should want to be completely satisfied on the points my hon. Friend made.
Are the Government just anxious to secure the position by there being adequate written evidence of a contract? If so, are they satisfied that the courts will so construe the Bill? If they are not, they are taking a great deal too much for granted. The fact that they require
…a written contract of sale, or a sale in pursuance of a written contract of sale,…
makes it seem to me that they may be demanding formalities which will not ordinarily have been observed by many small firms. It may well be that a practice has grown up which was originally derived from documents. There may be a well-established commercial practice between two concerns. A perfectly legitimate and well-authorised sale may have taken place on the telephone which will not qualify under the Bill for a rebate, as it should. I hope that the right hon. Gentleman will be able to allay the anxieties, because the Government are very often a little bit unrealistic in their conceptions of commercial practice, and they judge a good deal too much by their own way of running offices.
On the question of the time within which a claim must be made, Government Departments would do well to learn something from their practice, because there is not always spontaneity of reaction when one is communicating with them. Many people who write to the Ministry of Transport today do not find themselves embarrassed by an immediate reply. The Ministry is overflowing with complaints. There are often times when Government Departments do not respond with quite that speed which either their correspondents or Ministers would wish. Therefore, the Amendment asking for three months instead of one is very fair and well within the limits of the Government's understanding. I very much hope that the right hon. Gentleman will not only accept the Amendments but will make it absolutely clear that an informal contract based on a long period of practice would not be disqualified from a rebate to which it should, in equity, be entitled.

Mr. Sheldon: I am not quite sure about the position of Telex messages; I wonder if they would constitute a written contract of sale. A large number of firms now receive many contracts by Telex, confirming them subsequently.

Such is the confidence reposed in the Telex messages that some of the written and signed contracts do not appear until long afterwards, or, to an increasing extent, not at all.
It is also fairly clear that there is scope for much abuse, because anybody can sit down at a teleprinter and produce a contract months afterwards. Such is the custom, and such has been the way in which this very advantageous method of placing orders has been used to an increasing extent, that a fairly great area of hardship could be involved here.

The Minister of State, Board of Trade (Mr. George Darling): I hope that I shall be able to give the hon. Member for Yeovil (Mr. Peyton) some of the assurances he is asking for, but I ask him to excuse me, for the time being at any rate, a dissertation on the law of contract. I have to give it later and I must stick to the legal brief given to me for it, otherwise the Committee will be in trouble. I do not want to make observations about it off the cuff.
It is not, of course, for a Minister to try to make distinctions between Departments of the Government, but we at the Board of Trade are becoming slightly embarrassed by the number of messages we have received about the speed with which we deal with our business, and naturally I hope that this will continue.
I thank the hon. Member for Worthing (Mr. Higgins) for agreeing to take these Amendments together because it means that I can hope to get away with one speech instead of two. In relation to the first two Amendments, I agree that the exclusion of oral contracts—or their apparent exclusion—has caused some concern among certain groups of traders in the City and elsewhere because the Bill as it stands is confined to written contracts. But I think that I can give the hon. Gentleman the assurance he seeks about what we mean by contracts of sale and how this will apply.
It has been rightly pointed out, both on Second Reading and again today, that many trading contracts are made between firms here and overseas without any written contract at all and are scrupulously observed. The trader's word is enough. Those who deal with him know without dubiety that his word is his bond. They know that he will


honour the contract. Britain's reputation for honest dealing stands high in the world and I fully agree that we should cause grave damage to that enviable reputation if we even faintly suggest that Government and Parliament did not accept that the British trader's word was his bond, that he was not to be trusted and that we should insist on written contracts. That would be wrong and it is not the Government's intention.
We do, however, face a difficult issue here, as the right hon. Gentleman the Member for Enfield, West (Mr. lain Macleod) pointed out on Second Reading, when he put it very clearly. He said the Clause
…deals…with written contracts but as the House knows, a great deal of the business of this country is done in the first instance by a verbal agreement. Hon. Members will recall the phrase on which so much of the City of London works—'My word is my bond'—and although I absolutely recognise that, in a matter where public money is involved, one must have special standards of proof—that is not in dispute between us—I suggest that if, say, the President of the Board of Trade was satisfied that a contract was an absolutely genuine one which might be enforceable, so to speak, in honour, though not necessarily in accordance with Clause 2. it would be right for the Government to consider an Amendment to that effect…".—[OFFICIAL REPORT, 8th February, 1968; Vol. 758, c. 679.]
I fully agree with the right hon. Gentleman's approach, but he begs the question that we have been asked to solve—how is the President of the Board of Trade to satisfy himself that the oral contract was an absolutely genuine one which might be enforceable in honour? If we accepted the first two Amendments in this group, all oral contracts as well as written contracts would get a Board of Trade certificate if they satisfied the general conditions in terms of the Clause. In other words, all contracts, oral and written, would have to be examined by the Board of Trade.
This is where we come up against the legal and administrative difficulties. How does one examine an oral contract? We want to be helpful as far as it is practicable to be in a rather difficult case like this. Our officials and Customs and Excise officials, as the right hon. Gentleman will agree after his earlier remarks about Ministry of Labour officials, are skilled in solving problems of administration. They have examined this matter

thoroughly but they cannot find a way of carrying out the right hon. Gentleman's qualification that, in a matter where public money is involved, there must be special standards of proof.
My hon. Friend the Financial Secretary to the Treasury dealt with this point on Second Reading. I shall not quote him fully but I must repeat one sentence he said:
We cannot have an exclusively oral constract decided upon in this way."—[OFFICIAL REPORT, 8th February, 1968; Vol. 758, c. 781.]
I shall not go into detail but the Board of Trade is not equipped to conduct a series of oral examinations of innumerable exporters in order to decide who are to be believed when they say that they have entered into oral contracts and who are not to be believed. As I have said, we have tried to find a way out and I think that hon. Members must bear in mind that the Customs Department, under existing law, requires evidence of eligibility for the rebate. It has to see shipping documents, bills of lading and so forth, but does not necessarily have to see an individual contract and has no machinery for examination of trading contracts. Under this Clause, the job of examining contracts will fall upon the Board of Trade, and we have not the machinery for that either, because there has never been any need to examine them.
For the reasons I have given, we cannot take on the almost impossible task of examining and verifying oral contracts. It is inescapable that we must have some sort of written evidence that a contract is genuine, and we will go as far as we can to meet the arguments. But in practical terms, by and large, we shall be dealing with oral contracts and I hope and suppose that those contracts will be by firms which are well known and have impeccable reputations for honest dealing so that we can, therefore, accept, in most cases, correspondence acknowledging a contract made orally or a written acknowledgement of an order. That should cover most oral contracts because some kind of written evidence about an oral contract must appear at some time.
This we are prepared to do and do not need any Amendment to allow us to do it. I do not think that we can go any further. Indeed, I do not think that this Committee, with its keen scrutiny of public expenditure, would allow us to go any


further. As my hon. Friend the Member for Heywood and Royton (Mr. Barnett) said on Second Reading:
There are opportunities for evasion in all sorts of legislation dealing with extracting money from taxpayers or giving money away."—[OFFICIAL. REPORT, 8th February, 1968; Vol. 758, c. 690.]
My hon. Friend went on to explain the difficulties of providing for oral contracts in this matter without written evidence.
I hope that, on the assurance I have just given, the Amendment will be withdrawn. I repeat that we will accept in most cases where we know the firms concerned correspondence or a written acknowledgment of an order as evidence, as it were, of a genuine contract. I do not think that we can say that in all circumstances—and I do not think that right hon. and hon. Members opposite would ask us to do so—oral contracts will be accepted because, obviously, we would land ourselves in difficulties in trying to keep the spending of public money properly under control. The opportunities for evasion under the Amendments would be such that we suggest that they should not be accepted.

6.0 p.m.

Mr. lain Macleod: I know that the right hon. Gentleman is trying to be helpful, and both sides of the Committee are trying to find an answer. There are two things which I do not understand at this stage. First, the right hon. Gentleman said that he can do this, as it were, by administrative arrangement, but is he not bound by the words in the Clause as it stands, which always refer to a written contract of sale? Secondly—and this is a matter which gives some concern—would it not be wiser in that case for the right hon. Gentleman to accept not necessarily our Amendment, for we are not set on the wording by any means, but some Amendment which will satisfy people that the Government are trying to meet this difficulty?

Mr. Darling: The right hon. Gentleman will agree that the second question is what matters. We have carried out the undertaking of my hon. Friend the Financial Secretary as far as we have been able, but we have not been able to find a form of words, or any way out of the difficulty which would still bring us

properly within the law of contract. This is the point which was made by the hon. Member for Yeovil and I shall have to deal with it later.
We are in difficulty because an oral contract can be enforceable in the courts without written evidence, which is something which we must take into consideration, but I am advised that in these circumstances we cannot take an oral contract, which could be and should be enforceable in the courts, and tell the Board of Trade that it must act in a judicial capacity and that it and not a court must decide whether it is a genuine contract. That is an impossible administrative task to give to a Government Department.
Earlier, the hon. Member for Yeovil was talking about discretion being given to Government Departments and spoke against giving unlimited discretion. In this instance he is asking a Department to make decisions which are clearly judicial and which a Government Department ought not to have to decide. We have come up against this problem in law with which I shall have to deal later. However, I am advised by our legal advisers that the Amendment is unworkable, that we cannot give the Board of Trade discretion to exercise in administration what is now a legal judgment, because no Government Department could decide whether an oral contract was a genuine contract. This is something to be decided only in the courts. If anybody, even at this late stage, can suggest a way round—obviously, the Opposition have not been able to do so up to now—we would consider such representations.

Mr. Peyton: Although there may not have been a written contract of sale and although there may not have been a sale in pursuit of a written contract, there might still be a document which would be evidence of a sale having taken place. As the Clause is drafted, that writing, which at least would be evidence of a sale, would not be admissible.

Mr. Darling: We would accept that as evidence of a contract of sale in the circumstances which I have been describing—if it were a genuine contract. If there is no contract, we have no problem, because nobody will have bought or sold anything. There would be either


an oral or a written contract of some kind, or at least a document backing up a genuine oral contract and if there were we would accept it as evidence in the circumstances when we knew the firms and knew that the operations were justified and so on.

Mr. John Nott: If the issue goes to the courts and is a matter of interpretation, the courts must surely say that if no written contract of sale exists, there is no contract. I do not see how the Board of Trade could take evidence of a contract sale as making the sale eligible under the Bill as drafted. To do so would seem to be contrary to the wording of the Bill. I understand that the right hon. Gentleman is trying to help, but, however I read the provision, I cannot see how the Board of Trade would be allowed to take evidence of a contract of sale as being eligible.

Mr. Darling: But that is what we are proposing to do. Generally speaking, the oral contract will be a genuine contract in these circumstances. The opportunities for evasion are clear, for anybody could say, "We made this oral contract some time ago and we are therefore entitled to the export rebate, although we have no evidence". There must be some kind of evidence. Whether we are getting foul of the law is something with which our legal advisers will have to deal, but we are prepared to accept correspondence between those concerned, the buyer and the seller, or some evidence of an order for the goods to be supplied, as evidence of a genuine oral contract. In other words, we now apply tine definition of a written contract to this sort of arrangement.
If there is some dispute, which means that some legal action is involved, it is for the courts and not the Board of Trade to decide and the Board of Trade will rave to take account of any judgment given in the courts. I do not know whether hon. Members with more experience of these matters than I have can imagine any circumstances in which this sort of issue would arise over a genuine contract which the Board of Trade had accepted as a genuine oral contract.

Mr. Stephen Hastings: This is an important and highly complex matter. Let us suppose that no correspondence between the supplier in

this country and the recipient exists, or existed at the time the Bill was produced, but, as a result of the Clause, a letter can be produced from the recipient abroad, correspondence after that date, confirming that there was an oral contract before hand; would that be acceptable?

Mr. Darling: Offhand, I would say that it was, but I should like to consider the timing. Obviously, contracts which are to be fulfilled after the end of March, or in some cases deliveries after March, will qualify for the Board of Trade certificate of satisfaction.

Mr. Sheldon: Will my right hon. Friend answer my question about the Telex?

Mr. Darling: I am assured that a Telex reply to a Telex message is a written contract, so my hon. Friend need not worry any further.
We think that the period of one month from the date of the Royal Assent as being the time in which firms may apply for their pre-devaluation contracts to be certified is sufficient for the purpose. We discussed this with the C.B.I. which said that industry should have one month from the Royal Assent. In point of fact, it will have longer than one month in which to apply, because paragraph 3(2) of the Schedule permits the Board of Trade once the Bill is law to entertain applications made since the publication of the Bill. Public interest has already led more than 2,000 firms to approach us about contracts and more than 50,000 application forms have been made available to firms concerned. The Customs had already written to 23,000 firms about the Bill a few weeks ago. This means that any applications will be examined and also—I do not know when the Bill will be on the Statute Book—that the one month plus the previous period will give firms time to make applications.
Until the Bill is law—I can see the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) listening intently: perhaps this is the point that he was going to make—the forms are not statutory, but I am sure that he would agree that their availability gives firms much more time than if we had not adopted this procedure. The hon. Member for Worthing said that we were asking


firms to work to a tight time limit, but if the Amendment were accepted, the practical difficulty is that some applications for certificates would not reach us until, perhaps, the end of May and such certificates would probably not be available in time for the Customs to deal promptly with the payment in June of rebate on exports made in April.
The reason is that the Customs deal with payment of rebate three months after the exports and this has been generally accepted as a good arrangement. The Board of Trade will have enough difficulty, as it is, in issuing certificates quickly if the period of application is no later than one month after Royal Assent. Firms will not be happy if we alter the arrangement for paying rebate. This explanation is an invitation to firms to apply now. It does not matter whether the firms or the small exporters are doubtful about whether their contracts satisfy the terms of the Bill: they can make their applications and we will have some time to sort them out.
I will consider again the question of publicity with our officials to see whether, in addition to the correspondence which the Customs have had with these firms, we should do something more to draw attention to the time limits. We can consider this—

Mr. Higgins: I am trying to follow the right hon. Gentleman's argument closely. I can see the case for the rebate being paid as quickly as possible and not over a longer period than in the past, but I do not see why this would be affected by the fact that a particular exporter who thought that he was entitled to the rebate should be allowed to put in his claim after three months rather than one.

Mr. Darling: We should get into administrative difficulties, because we have been working on this arrangement up to now. We have gone very carefully into this, and neither the Customs nor the Board of Trade wants to alter the arrangements, but we want to meet the hon. Gentleman's point, which is to give the applicants sufficient time. He says that one month is not enough, but the arrangements which we have been making in fact allow more than one month. I am sure that the course which we follow is appre

ciated by those concerned and would be welcomed by hon. Members opposite. To go further, however, would involve us in administrative difficulties which would not help the firms whose interests the hon. Gentleman is looking after.

6.15 p.m.

Mr. Higgins: I listened to the right hon. Gentleman with interest, I am sure that he is trying to help, but we find it impossible, try as we might, to accept his explanation. On oral agreements, the Clause will be extremely restrictive, unamended, and will mean that the Government will rely on written contracts of sale. Although we know that the Board of Trade will consider sympathetically any oral agreements which may have been made in good faith by firms of high repute, this is a matter of sufficient importance to justify our insisting on the Amendment. This matter may affect particular firms considerably and have repercussions on their permanent relations with their customers.
My hon. Friend the Member for St. Ives (Mr. Nott) was justified in saying that he could not understand how the Government could extend their scope and grant rebates to people who had made oral agreements if the Bill were passed as it is. I would have thought that the right hon. Gentleman would have accepted the Amendment, given that, later in the same paragraph, the Board of Trade still has a right to consider the matter and decide, since it has to be satisfied that a genuine agreement has been made and that the export had taken place within the terms of the Clause otherwise.
So, this is not opening a floodgate but merely giving the Board of Trade greater scope to decide whether an agreement is genuine and whether it should be satisfied that the arrangement is reasonable. We still accept what my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said on Second Reading, in the passage which the right hon. Gentleman quoted, but we cannot see that this is prejudiced by the acceptance of the Amendment. On a matter of this importance, when the Government have taken an arbitrary action in reciding to withdraw the export rebate on a date of which exporters had very little notice, it is up to them to formulate an acceptable Amendment and be rather more


lenient in these cases. We must adhere to the view in the Amendment given, that there are precautions against abuse.
The right hon. Gentleman's argument about three months was a non sequitur. I say that with respect, because I always listen to his arguments with interest, but he argued clearly that, because the Board of Trade and the Customs and Excise normally pay the rebate after a given period which, accidentally, also is three months—it would somehow completely disorganise matters if the people applying were to be given a little longer, namely, an extra two months. This does not follow at all. If they liked to apply earlier—some could, if the contracts took place some time before—there is no reason why the Government should not pay them the rebate as early as possible.
If that is not so, why should they not be allowed greater scope? This would probably relieve the pressure on Government staff. Given the arbitrary nature of the Government's decision, the important thing is not merely whether the Customs or the Board of Trade is happy, but whether the exporters find a longer period convenient. It may be that they are in the middle of a seasonal rush. It may be—and one hopes that this would be the case—that they are getting many extra orders in the post-devaluation period. If they are receiving extra orders, and if their staff for dealing with this kind of paper work is stretched, it is unfortunate that the Government should put an additional load on them. If there is a time limit on the basis suggested in the Bill, the natural tendency will be for the firm to say, "We must give priority to claiming the rebate on an export we made some while ago rather than to additional export orders".
There is clearly a case for giving greater scope in the Bill. I understand that we are to have separate divisions. I hope my hon. Friends will support the Amendments.

Mr. Darling: I should like to deal with two points which the hon. Member for Worthing (Mr. Higgins) has made about oral contracts. The phrase "written contract" covers all contracts which are evidenced in writing, including contracts by correspondence. I understand that this has been legally established and that we need not worry more about it. We can entertain oral contracts which are

the subject of written confirmation. The written confirmation creates a written contract for sale or hire as long as it complies with the relevant conditions of the Clause. I cannot agree that acceptance of the two Amendments on oral contracts would not open the door to evasion which could not be detected.

Sir Derek Walker-Smith: Would it not be better for the Minister to see whether the drafting of the Clause would be more suitably and better expressed by referring to "contracts evidenced in writing" as well as to "written contracts"? Every neophyte at the Bar has drawn statements of claim containing the words "by contract, partly oral and partly in writing. In so far as it was oral, it was made in such and such conversations; in so far as it was in writing, it was contained in such and such documents."
Under British law, the sale of goods is governed by the Sale of Goods Act, which makes it necessary for there either to be some form of acceptance or part performance, or for there to be some note or memorandum in writing of the contract made and signed by the party to be charged or his agent in that behalf. That is the evidence of the contract in writing rather than the contract originally existing in writing.
It may well be that the words "written contract" will be construed to cover all forms of contract, whether they be originally oral and evidenced in writing or whether they be a contract which, as originally made, is an agreement in writing. There may not be a great deal of practical importance in this because I cannot envisage many cases in which contracts are made for the export of goods without there being a sufficient memorandum in writing binding the parties and making the contract enforceable.
It might be as well if the Minister were to look at the drafting of the Clause and ensure that it is correct in the sense, not only that it will be construed as he says but that it will be so understood from the start and save the necessity of argument when the Bill has become law.

Mr. Nott: My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) made a very good point. There is a distinction between confirmation of an oral contract


which may constitute a contract and a contract which arises during correspondence and what the Minister referred to, which was evidence produced to the Board of Trade of an oral contract. Evidence produced to the Board of Trade of an oral contract is quite different from confirmation of a contract or a contract entered into in correspondence. Evidence to the Board of Trade of an oral contract does not, according to the Clause, allow the Board of Trade to give the export rebate.
I think that we on this side of the Committee are right. I do not see why the text is sacred. We are only in Committee.

Mr. Darling: I am only a layman, but I cannot see any legal difference between the contract evidenced in writing and a written contract. However, I will look into the point made by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), whose forensic skill in these matters I cannot match. We have covered the point made by the hon. Member for St. Ives (Mr. Nott). I am prepared to go over all the arguments again, but I think that the hon. Gentleman is wrong.

Question put, That the Amendment be made:—

The Committee divided: Ayes 142. Noes 178.

Division No. 55.]
AYES
[6.28 p.m.


Alison, Michael (Barkston Ash)
Grant, Anthony
Onslow, Cranley


Allason, James (Hemel Hempstead)
Harris, Frederic (Croydon, N.W.)
Orr-Ewing, Sir Ian


Astor, John
Harris, Reader (Heston)
Page, John (Harrow, W.)


Atkins, Humphrey (M't'n &amp; M'd'n)
Harrison, Brian (Maldon)
Peel, John


Awdry, Daniel
Harrison, Col. Sir Harwood (Eye)
Percival, Ian


Balniel, Lord
Hastings, Stephen
Pike, Miss Mervyn


Barber, Rt. Hn. Anthony
Heald, Rt. Hn. Sir Lionel
Pink, R. Bonner


Beamish, Col. Sir Tufton
Heath, Rt. Hn. Edward
pounder, Rafton


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Higgins, Terence L.
Powell, Rt. Hn. J. Enoch


Biffen, John
Hiley, Joseph
Prior, J.M L.


Biggs-Davison, John
Hill, J. E. B.
Pym, Francis


Birch, Rt. Hn. Nigel
Hogg, Rt. Hn. Quintin
Ramsden. Rt. Hn. James


Bossom, Sir Clive
Holland, Philip
Renton, Rt. Hn. Sir David


Boyd-Carpenter, Rt. Hn. John
Hooson, Emlyn
Ridley, Hn. Nicholas


Boyle, Rt. Hn. Sir Edward
Hordern, Peter
Ridsdale, Julian


Bromley-Davenport, Lt.-Col. SirWalter
Howell, David (Guildford)
Rippon, Rt. Hn. Geoffrey


Brown, Sir Edward (Bath)
Hunt, John
Robson Brown, Sir William


Bruce-Gardyne, J.
Hutchison, Michael Clark
Rossi, Hugh (Hornsey)


Bryan, Paul
Iremonger, T.L.
Russell, Sir Ronald


Buck, Antony (Colchester)
Irvine, Bryant Godman (Rye)
Scott, Nicholas


Burden, F. A.
Jopling, Michael
Scott-Hopkins, James


Campbell, Gordon
King, Evelyn (Dorset, S.)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Carlisle, Mark
Knight, Mrs. Jill
Silvester, Frederick


Channon, H. P. G.
Lancaster, Col. C. G.
Sinclair, Sir George


Chichester-Clark, R.
Legge-Bourke, Sir Harry
Steel, David (Roxburgh)


Cooper-Key, Sir Neill
Lewis, Kenneth (Rutland)
Stoddart-Scott. Col. Sir M. (Ripon)


Cordle, John
Lloyd, Rt. Hn. Selwyn (Wirral)
Tapsell, Peter


Corfleld, F.V.
Loveys, W. H.
Taylor, Sir Charles (Eastbourne)


Costain,A.P.
Lubbock, Eric
Taylor,Edward M.(G'gow,Catheart)


Crowder, F. P
McAdden, Sir Stephen
Taylor, Frank (Moss Side)


Davidson, James (Abercleenshire,W.)
Mackenzie, Alasdair (Ross&amp;Crom'ty)
Temple, John M.


d'Avigdor-Goldsmid, Sir Henry
Maclean, Sir Fitzroy
Thatcher, Mrs. Margaret


Dean, Paul (Somerset, N.)
Macleod, Rt. Hn. lain
Turton, Rt. Hn. R. H.


Deedes, Rt. Hn. W. F. (Ashford)
McMaster, Stanley
Van straubenzee, W. R.


Dodds-Parker, Douglas
Maddan, Martin
Walker-Smith, Rt. Hn. Sir Derek


Doughty, Charles
Maginnis, John E.
Walters, Dennis


Eden, Sir John
Mawby, Ray
Ward, Dame Irene


Elliott, R.W (N'c'tle-upon-Tyne.N.)
Maxwell-Hyslop, R.J.
Weatherill, Bernard


Errington, Sir Eric
May don, Lt.- Cmdr. S. L. C.
Webster David


Eyre, Reginald
Mills, Peter (Torrington)
Whitelaw, Rt. Hn. William


Farr, John
Miscampbell, Norman
Wills sir Gerald (Bridgwater)


Fisher, Nigel
Montgomery, Fergus
Wilson, Geoffrey (Truro)


Fletcher-Cooke, Charles
More, Jasper
Worsley, Marcus


Fortescue, Tim
Morrison, Charles (Devizes)
Wylie, N. R.


Foster, Sir John
Mott-Radclyffe, Sir Charles'



Glover, Sir Douglas
Munro-Lucas-Tooth, Sir Hugh
TELLERS FOR THE AYES:


Glyn, Sir Richard
Murton, Oscar
Mr. Hector Monro and


Goodhart, Philip
Noble, Rt. Hn. Michael
Mr. Timothy Kitson.


Gower, Raymond
Nott, John





NOES


Albu, Austen
Allen, Scholefield
Atkinson, Norman (Tottenham)


Allaun, Frank (Salford, E.)
Armstrong, Ernest
Bacon, Rt. Hn. Alice


Alldritt, Walter
Atkins, Ronald (Preston, N.)
Barnett, Joel




Bishop. E. S.
Grey, Charles (Durham)
Oram, Albert E.


Blackburn, F.
Griffiths, David (Rother Valley)
Orbach, Maurice


Booth, Albert
Griffiths, Rt. Hn. James (Lianelly)
Orme, Stanley


Boyden, James
Griffiths, Will (Exchange)
Oswald, Thomas


Braddock, Mrs. E. M.
Hamling, William
Owen, Dr. David (Plymouth, S'tn)


Bradley, Tom
Harrison, Walter (Wakefield)
Page, Derek (King's Lynn)


Bray, Dr. Jeremy
Haseldine, Norman
Pannell, Rt. Hn. Charles


Brooks, Edwin
Hazell, Bert
Park, Trevor


Brown,Bob(N'c'tle-upon-Tyne,W.)
Heffer, Eric S,
Parker, John (Dagenham)


Brown, R. W. (Shoreditch &amp; F'bury)
Henig, Stanley
Pavitt, Laurence


Buchan, Norman
Herbison, Rt. Hn. Margaret
Pearson, Arthur (Pontypridd)


Butler, Herbert (Hackney, C.)
Hooley, Frank
Pentland, Norman


Butler, Mrs. Joyce (Wood Green)
Howell, Denis (Small Heath)
Perry, George H. (Nottingham, S.)


Carmichael, Neil
Hoy, James
Prentice, Rt.Hn. R. E.


Carter-Jones, Lewis
Hughes, Emrys (Ayrshire, S-)
Price, Christopher (Perry Barr)


Castle, Rt. Hn. Barbara
Hughes, Hector (Aberdeen, N.)
Price, Thomas (Westhoughton)


Chapman, Donald
Hughes, Roy (Newport)
Price, William (Rugby)


Coe, Denis
Hunter, Adam
Randall, Harry


Coleman, Donald
Hynd, John
Rankin, John


Concannon, J.D.
Jackson, Peter M. (High Peak)
Reynolds, G. W.


Conlan, Bernard
Jeger, George (Goole)
Rhodes, Geoffrey


Craddock, George (Bradford, S.)
Jenkins, Hugh (Putney)
Robinson, W.0.J. (Watth'stow, E.)


Crawshaw, Richard
Johnson, James (K'ston-on-Hull, W.)
Rose, Paul


Cullen, Mrs. Alice
Jones, Dan (Burnley)
Ross, Rt. Hn. William


Dalyell, Tam
Judd, Frank
Shaw, Arnold (llford, S.)


Darling, Rt. Hn. George
Kelley, Richard
Sheldon, Robert


Davidson, Arthur (Accrington)
Kenyon, Clifford
Shinwell, Rt. Hn. E.


Davies. Dr. Ernest (Stretford)
Lawson, George
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Dell, Edmund
Leadbitter, Ted
Silkin, Rt. Hn. John (Deptford)


Dempsey, James
Lee, Rt. Hn. Frederick (Newton)
Silverman, Julius (Aston)


Dewar, Donald
Lee, John (Reading)
Slater, Joseph


Diamond, Rt. Hn, John
Lestor, Miss Joan
Small, William


Dickens, James
Lewis, Ron (Carlisle)
Spriggs, Leslie


Dobson, Ray
Lipton, Marcus
Swain, Thomas


Doig, Peter
Lomas, Kenneth
Swingler, Stephen


Dunn, James A.
Loughlin, Charles
Symonds, J.B.


Dunnett, Jack
Lyon, Alexander W. (York)
Tomney, Frank


Eadie, Alex
McBride, Neil
Wainwright, Edwin (Dearne Valley)


Edwards, Robert (Bilston)
MacCoIl, James
Walker, Harold (Doncaster)


Ellis, John
McGuire, Michael
Wallace, George


English, Michael
Maclennan, Robert
Watkins, Tudor (Brecon &amp; Radnor)


Ennals, David
MacPherson, Malcolm
Wellbeloved, James


Ensor, David
Mahon, Peter (Preston, S-)
Wells, William (Walsall, N.)


Evans, Albert (Islington, S.w.)
Mallalieu, J.P.W. (Huddersfield,E.)
Whitaker, Ben


Evans, loan L. (Birm'h'm, Yardley)
Manuel, Archie
White, Mrs. Eirene


Faulds, Andrew
Mapp, Charles
Wilkins, W.A.


Fernyhough,E.
Marks, Kenneth
Willey, Rt. Hn. Frederick


Fitch, Alan (Wigan)
Maxwell, Robert
Williams, Alan Lee (Hornchurch)


Fletcher, Ted (Darlington)
MilIan, Bruce
Williams, W. T. (Warrington)


Foot, Sir Dingle (Ipswich)
Mitchell, R. C. (S'th'pton, Test)
Willis, George (Edinburgh, E.)


Foot, Michael (Ebbw Vale)
Molloy, William
Wilson, William (Coventry, S.)


Ford, Ben
Moonman, Eric
Woodburn, Rt. Hn. A.


Fraser, John (Norwood)
Morgan, Elystan (Cardiganshire)
Woof, Robert


Galpern, Sir Myer
Morris, Charles R. (Openshaw)



Ginsburg, David
Moyle, Roland
TELLERS FOR THE NOES:


Gourlay, Harry
Murray, Albert
Mr. Joseph Harper and


Gray, Dr. Hugh (Yarmouth)
Oakes, Gordon
Mr. Eric G. Varley.


Gregory, Arnold
O'Malley, Brian

Amendment proposed: No. 11, in page 3, line 15, leave out ' one month 'and insert three months'.—[Mr. Higgins.]

Question put That Amendment be made:—

The Committee divided: Ayes 139. Noes 178.

Division No. 56.]
AYES
[6.36 p.m.


Alison, Michael (Barkston Ash)
Brown, Sir Edward (Bath)
Dean, Paul (Somerset, N.)


Aliason, James (Hemel Hempstead)
Bruce-Gardyne, J.
Deedes, Rt. Hn. W. F. (Ashford)


Astor, John
Bryan, Paul
Dodds-Parker, Douglas


Atkins, Humphrey (M't'n &amp; M'd'n)
Buck, Antony (Colchester)
Doughty, Charles


Awdry, Daniel
Burden,F. A.
Eden, Sir John


Balniel, Lord
Campbell, Cordon
Elliott, R. W. (N 'c'tle-upon-Tyne,N.)


Barber, Rt. Hn. Anthony
Carlisle, Mark
Erringtorr, Sir Eric


Beamish, Col. Sir Tufton
Channon, H. P. G.
Eyre, Reginald


Bennett, Di. Reginald (Gos. &amp; Fhm)
Chichester-. Clark, R.
Farr, John '


Biffen, John
Cooper-Key, Sir Neill
Fisher, Nigel


Biiggs-Davison, John
Cordle, John
Fletcher-Cooke, Charles


Birch, Rt. Hn. Nigel
Corfield,F. V.
Fortescue, Tim


Bossom, Sir Clive
Costain, A. P.
Glyn, Sir Richard


Boyd-Carpenter, Rt. Hn. John
Crowder, F. P.
Goodhart, Philip


Boyle, Rt. Hn. Sir Edward
Davidson, James (Aberdeenshire, W.)
Gower, Raymond


Bromley-Davenport,Lt.-Col. Sir Walter
d'Avigdor-Goldsmid, Sir Henry
Grant, Anthony




Harris, Frederic (Croydon, N.W.)
McMaster, Stanley
Rossi, Hugh (Homsey)


Harris, Reader (Heston)
Maddan, Martin
Russell, Sir Ronald


Harrison, Brian (Maldon)
Maginnis, John E.
Scott, Nicholas


Harrison, Col. Sir Harwood (Eye)
Mawby, Ray
Scott-Hopkins, James


Hastings, Stephen
Maxwell -Hyslop, R. J
Shaw, Michael (Sc'b'gh &amp; Whitby)


Heald, Rt. Hn. Sir Lionel
Maydon, Lt - Cmdr. S.L.C.
Silvester, Frederick


Higgins, Terence L.
Mills, Peter (Torrington)
Sinclair, Sir George


Hiley, Joseph
Miscampbell, Norman
Steel, David (Roxburgh)


Hill, J. E. B.
Montgomery, Fergus
Stoddart-Scott, Col. Sir M. (Ripon)


Hogg, Rt. Hn. Quinlin
Morrison, Charles (Devizes)
Tapsell, Peter


Holland, Philip
Mott-Radclyfte, Sir Charles
Taylor, Sir Charles (Eastbourne)


Hooson, Emlyn
Munro-Lucas-Tooth, Sir Hugh
Taylor, Edward M.(G'gow,Cathcart)


Hordern, Peter
Murton, Oscar
Taylor, Frank (Moss Side)


Howell, David (Guildford)
Noble, Rt. Hn. Michael
Temple, John M.


Hunt, John
Nott, John
Thatcher, Mrs. Margaret


Hutchison, Michael Clark
Onslow, Cranley
Turton, Rt. Hn.R. H.


Iremonger, T.L.
Orr-Ewing, Sir Ian
Van Straubenzee, W. R.


Irvine, Bryant Godman (Rye)
Page, John (Harrow, W.)
Walker-Smith, Rt. Hn. Sir Derek


Jopling, Michael
Peel, John
Walters, Dennis


King, Evelyn (Dorset, S.)
Percival, Ian
Ward, Dame Irene


Kitson, Timothy
Pike, Miss Mervyn
Weatherill, Bernard


Knight, Mrs. Jill
Pink, R. Bonner
Webster, David


Lancaster, Col. C. G.
Pounder, Rafton
Whitelaw, Rt. Hn. William


Legge-Bourke, Sir Harry
Powell, Rt. Hn. J. Enoch
Wills, Sir Gerald (Bridgwater)


Lewis, Kenneth (Rutland)
Prior, J.M. L.
Wilson, Geoffrey (Truro)


Lloyd, Rt. Hn. Selwyn (Wirral)
Pym, Francis
Worsley, Marcus


Loveys, W. H.
Ramsden, Rt. Hn. James
Wylie, N. R.


Lubbock, Eric
Renton, Rt. Hn. Sir David



McAdden, Sir Stephen
Ridley, Hn. Nicholas
TELLERS FOR THE AYES:


Mackenzie,Alasdair(Ross&amp;Crom'ty)
Ridsdale, Julian
Mr. Jasper More and


Maclean, Sir Fitzroy
Rippon, Rt. Hn. Geoffrey
Mr. Hector Monro.


Macleod, Rt. Hn. lain
Robson Brown, Sir William





NOES


Albu, Austen
Ennals, David
Lewis, Ron (Carlisle)


Allaun, Frank (Salford, E.)
Ensor, David
Lipton, Marcus


Alldritt, Walter
Evans, Albert (Islington, S.W.)
Lomas, Kenneth


Allen, Scholefleld
Faulds, Andrew
Loughlin, Charles


Armstrong, Ernest
Fernyhough,E.
Lyon, Alexander W. (York)


Atkins, Ronald (Preston, N.)
Fitch, Alan (Wigan)
McBride, Neil


Atkinson, Norman (Tottenham)
Fletcher, Ted (Darlington)
Maccoll, James


Bacon, Rt. Hn. Alics
Foot, Sir Dingle (Ipswich)
McGuire, Michael


Barnett, Joel
Foot, Michael (Ebbw Vale)
Mackenzie, Gregor (Ruthergien)


Bishop,E. S.
Ford, Ben
Maclennan, Robert


Blackburn F.
Fraser, John (Norwood)
MacPherson, Malcolm


Booth, Albert
Freeson, Reginald
Mahon, Peter (Preston, S.)


Boyden, James
Galpern, Sir Myer
Mallalieu, J.P.W.(Huddersfield,E.)


Braddock, Mrs. E. M.
Ginsburg, David
Manuel, Archie


Bradley, Tom
Gray, Dr. Hugh (Yarmouth)
Mapp, Charles


Bray, Dr. Jeremy
Gregory, Arnold
Marks, Kenneth


Brooks, Edwin
Grey, Charles (Durham)
Maxwell, Robert


Brown, Bob (N'c'tle-upon-Tyne, W.)
Griffiths, David (Rother Valley)
Millan, Bruce


Brown, R. W. (Shoreditch &amp; F'bury)
Griffiths, Rt. Hn. James (Llanelly)
Mitchell, R. C. (S'th'pton, Test)


Buchan, Norman
Griffiths, Will (Exchange)
Molloy, William


Butler, Herbert (Hackney, c.)
Hamling, William
Moonman, Eric


Butler, Mrs. Joyce (Wood Green)
Harper, Joseph
Morgan, Elystan (Cardiganshire)


Carmichael, Neil
Harrison, Walter (Wakefield)
Morris, Charles R. (Openshaw)


Carter-Jones, Lewis
Haseldine, Norman
Moyle, Roland


Castle, Rt. Hn. Barbara
Hazell, Bert
Murray, Albert


Coe, Denis
Heffer, Eric S.
Oakes, Gordon


Coleman, Donald
Henig, Stanley
O'Malley, Brian


Concannon,J. D.
Herbison, Rt. Hn. Margaret
Oram, Albert E.


Conlan, Bernard
Hooley, Frank
Orbach, Maurice


Craddock, George (Bradford, S.)
Howell, Denis (Small Heath)
Orme, Stanley


Crawshaw, Richard
Hoy, James
Oswald, Thomas


Cuilen, Mrs. Alice
Hughes, Emrys (Ayrshire, S.)
Owen, Dr. David (Plymouth, S'tn)


Dalyell, Tarn
Hughes, Hector (Aberdeen, N.)
Page, Derek (King's Lynn)


Darling, Rt. Hn. George
Hughes, Roy (Newport)
Pannell, Rt. Hn. Charles


Davidson, Arthur (Accrington)
Hunter, Adam
Park, Trevor


Davies, Dr. Ernest (Stretford)
Hynd,John
Parker, John (Dagenham)


Dell, Edmund
Jackson, Peter M. (High Peak)
Pavitt, Laurence


Dempsey, James
Jeger, George (Goole)
Pearson, Arthur (Pontypridd)


Dewar, Donald
Jenkins, Hugh (Putney)
Pentland, Norman


Diamond, Rt. Hn. John
Johnson, James (K'ston-on-Hull, W.)
Perry, George H. (Nottingham, S.)


Dickens, James
Jones, Dan (Burnley)
Prentice, Rt. Hn R. E.


Dobson, Ray
Judd, Frank
Price, Christopher (Perry Darr)


Doig, Peter
Kelley, Richard
Price, Thomas (Westhoughton)


Dunn, James A.
Kenyon, Clifford
Price, William (Rugby)


Dunnett, Jack
Lawson, George
Randall, Harry


Eadie, Alex
Leadbitter, Ted
Rankin, John


Edwards, Robert (Bitston)
Lee, Rt. Hn. Frederick (Newton)
Reynolds, G. W.


Ellis, John
Lee, John (Reading)
Rhodes, Geoffrey


English, Michael
Lestor, Miss Joan
Robinson, W.O J. (Walth'stow., E.)






Ross, Paul
Symonds, J. B.
Willey, Rt. Hn. Frederick


Ross, Rt. Hn. William
Tomney, Frank
Williams, Alan Lee (Hornchurch)


Shaw, Arnold (llford, S.)
Varley, Eric G.
Williams, W. T. (Warnngton)


Sheldon, Robert
Wainwright, Edwin (Dearne Valley)
Willis, George (Edinburgh, E.)


Shinwell, Rt. Hn. E.
Walker, Harold (Doncaster)
Wilson, William (Coventry, S.)


Short,Rt.Hn.Edward(N'c'tle-u-Tyne)
Wallace, George
Woodburn, Rt. Hn. A.


Silverman, Julius (Aston)
Watkins, Tudor (Brecon &amp; Radnor)
Woof, Robert


Slater, Joseph
Wellbeloved, James



Small, William
Wells, William (Walsall, N.)
TELLERS FOR THE NOES:


Spriggs, Leslie
Whitaker, Ben
Mr. Harry Gourlay and


Swain, Thomas
White, Mrs. Eirene
Mr. loan L. Evans.


Swingler, Stephen
Wilkins, W. A.

Mr. Hastings: I beg to move, Amendment No. 12, in page 3, line 16, at the end to insert 'either'.

The Deputy Speaker (Mr. Sydney Irving): With this Amendment we can also take Amendments No. 20, in page 3, line 19, leave out paragraphs (b) and (c) and insert:
(b) that the contract satisfies the conditions in subsection (2A) or as the case may be subsection (2B) below.
No. 13. in line 23, at end insert:
'or

(a) that the contract of sale was made before 19th November 1967;
(b) that the price for the goods was payable in a currency other than sterling; and
(c) that it is expressly provided in the contract that the agreed prices shall be subject to adjustment in the event of a change in the exchange rate of sterling with such currency'.
No. 21, in line 25, at end insert:
(2.A) Where the price for the goods is expressed in sterling, the said conditions are that there is no provision for the alteration of the terms of the contract on a change in the exchange rate of sterling with any other currency or medium of exchange, or on the withdrawal of export rebates, and—

(a) either that the price for the goods is payable in sterling, or
(b) where the price for the goods is not payable in sterling, that there is no provision for the conversion of the expressed sterling price into the currency in which the price is payable to be at a rate of exchange which was the rate prevailing at some time before 19th November 1967.
(2B) Where the price for the goods is not expressed in sterling, the said conditions are—
(a) either that the price is payable in sterling and the contract provided for the conversion of the expressed price into sterling at a rate of exchange which was the rate prevailing at some time before 19th November 1967, or
(b) that the price is not payable in sterling and the contract provided for the trice to be reduced on a change in the exchange rate of sterling with the currency in which the price is expressed,
and in either case that there is no provision for the alteration of the terms of the contract on the withdrawal of export rebates.

No. 22, in the Schedule, page 5, line 22, leave out paragraphs (b) and (c) and insert:
(b) that the contract satisfies the conditions in sub-paragraph (2) or as the case may be sub-paragraph (3) below.
No. 23, in page 5, line 29, at end insert:
(2) Where the consideration payable for the hiring is expressed in sterling, the said conditions are that there is no provision for the alteration of the terms of the contract on a change in the exchange rate of sterling with any other currency or medium of exchange, or on the withdrawal of export rebates, and—

(a) either that the consideration is payable in sterling, or
(b) where the consideration is not payable in sterling, that there is no provision for the conversion of the expressed sterling amount into the currency in which the consideration is payable to be at a rate of exchange which was the rate prevailing at some time before 19th November 1967.
(3) Where the consideration payable for the hiring is not expressed in sterling, the said conditions are—

(a) either that the consideration is payable in sterling and the contract provided for the conversion of the expressed amount into sterling at a rate of exchange which was the rate prevailing at some time before 19th November 1967, or
(b) that the consideration is not payable in sterling and the contract provided for the expressed amount to be reduced on a change in the exchange rate of sterling with the currency in which it is expressed,
and in either case that there is no provision for the alteration of the terms of the contract on the withdrawal of export rebates.

6.45 p.m.

Mr. Hastings: Amendment No. 12, is consequential on Amendment No. 13, and I am sure it is for the convenience of the Committee that these two at any rate should go together, and probably Amendment No. 21 as well.
The purpose of the Amendment is a fairly clear one and can be summed up like this—where there is a contract which concluded before the statutory date, in dollars or other currencies, so that devaluation leaves the exporter in precisely


the same position as if he had contracted in sterling. The rebate should stand.
Although the right hon. Gentleman was unable, in spite of his efforts, to satisfy us on this side on the last group of important Amendments, I earnestly hope he will be able to do so on this one. I say that with some cause for he has put down an Amendment which appears to me, if I understand it correctly, to go a long way, if not the whole way, towards meeting this case.
Although I have tried to assess the extent of the coverage of trade covered by this Amendment that, nevertheless, the case which I have particularly in mind is one in which my own company is engaged, and, therefore, I have an interest there. It is an important contract for no fewer than 165 light aircraft in the American market where pricing is extremely keen. The total value over the years could be some£14 million. So it is no mean point in terms of export earnings. Like everybody else in our business, we have to take advantage of every kind of crumb of assistance like the export rebate, and naturally, it would make a severe difference to our prices if things went wrong.
Amendment No. 13 is reasonably simple, and it is presented as a straight additional condition, or superimposition on the conditions laid down in the Clause for acceptance by the Board of Trade for a certificate.
We now come to the right hon. Gentleman's Amendment No. 21, which I feel sure is designed to go some way to meet the same point, but I have to tell him that although I had read it several times I have not come to any precise conclusion as to what it means, particularly subsections (2A) and (2B). I think the depth of suspicion in the mind of the Parliamentary draftsmen must be virtually diabolical in assessing what firms will get up to in this connection; by contrast Machiavelli would have blushed for his innocence. I had hoped that my own rather less ambitious draft would have met the case.
No doubt the Minister will enlighten us about subsection (2A). I turn to subsection (2B). This persuades me that we are on the same point, for it reads:
.. that the price is not payable in sterling and the contract provided for the price to be

reduced on a change in the exchange rate of sterling with the currency in which the price is expressed.
There is only one word on which I would take issue with the right hon. Gentleman. It is not within the context of the contract which I have in mind but is a more general point. With respect to those who work so hard to produce these drafts, it would be more appropriate if we used the word "adjusted" instead of "reduced". A reduction takes account only of a downward adjustment. But, for example, if the Germans upvalued the mark—and there has been talk of it—an upward adjustment would occur. Then it looks as though the Board of Trade considers it likely that exporters will write the export rebate into their contracts as a proportion of the price which they are quoting, but I cannot see how any exporter would be brought to do such a thing.
The case which I have mentioned is by no means uncommon. The dollar contract was at the distributor's wish. It frequently happens in those circumstances in which one is distributing through Americans to the American market. In view of the speed with which this Measure was introduced, it is not surprising that the point escaped the notice of those concerned. I submit that the firm involved in this contract—and I believe others in similar circumstances—would be harshly treated if they suffered simply because the currency selected was other than sterling. I beg to move.

Mr. Darling: I assure the hon. Member for Bedford, Mid-Bedfordshire (Mr. Hastings) that the Amendments which we have put down go much further than he thinks they do. I am willing to discuss our Amendments now and come to the other Amendments as we go along.

The Deputy Chairman: Order. There can be only one debate on this group of Amendments. The right hon. Gentleman may move the Government Amendments formally when we reach them, but there is only one opportunity to debate them.

Mr. Darling: I want to do what the Committee wishes me to do. I will deal now with the Government Amendments 20 and 21 if the Committee so wishes and will move those Amendments formally when we reach them. I will deal with


other issues which hon. Members wish to raise.

Mr. Higgins: It would be most convenient if the right hon. Gentleman dealt with the Government Amendments but, in particular, will he tell us the extent to which they are the same as the Amendment in the name of my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) and the extent to which they are either broader or narrower?

Mr. Dading: I will not do it quite in that way
We are in close contact with British industrialists, large and small, and we are always willing quickly to respond to useful arguments and representations made to us. After the Bill had been published we received representations, such as those rightly put to us by the hon. Member for Mid-Bedfordshire. I will no: discuss his Amendment in detail. He is suggesting an Amendment which would remove anomalies in the Clause and which would widen the concessions for pre-devaluation contracts. Although he is not clear whether the wording of the Government Amendments goes as far as he wishes, in fact 'they go much further, and his own Amendments are too narrow and do not widen the concessions enough. I will explain that when I speak about the Government's Amendments.
There are also some technical defects in the hon. Member's Amendment, as usually is the case when hon. Members, without the assistance of Parliamentary draftsmen, are trying to do a difficult operation. Any discussion of his Amendment would be unprofitable. I will, therefore, come to the Government's Amendments and explain what we hope, expect and believe they will achieve.
The object of these Amendments is to allow rebate on those pre-devaluation contracts whose terms deny the exporter any benefit from devaluation. Subsection (2,b) as drafted is both too narrow and too wide in imposing the condition, for this purpose, that the contract price must be payable in sterling. By itself, the condition denies rebate on a contract priced at£100 but payable in dollars, where before devaluation the exporter would have received 280 dollars but will now receive only 240 dollars and in terms of the sterling equivalent is no

better off by reason of devaluation. However, the existing condition allows rebate on a contract priced at 280 dollars but payable in sterling, where before devaluation the exporter would have received£100 but will now receive nearly£120. Amendments Nos. 20 and 21 remove that anomaly by catering for the various different combinations of the currencies of price and of payment, where no benefit accrues from the devaluation of sterling. I will explain, with some brief examples, how the Amendments will work in practice.
Take a contract priced at£100 in sterling. If provision exists in the contract to alter the price on a change in exchange rates or on withdrawal of rebate, then the supplier is protected against loss whether his contract is payable in sterling or, for example, in dollars. But if no such provisions exist and the price is payable in sterling, the supplier will receive only£100 and will suffer from withdrawal of the rebate. He accordingly, therefore, receives the concession which we propose—in order to get rid of this anomaly—under subsection (2A) of the Amendment. If the price is payable only in dollars, however, and there is provision for converting the sterling price into dollars at the pre-devaluation rate which would yield payment of 280 dollars, that would now be worth nearly£120. The supplier has thereby benefited from devaluation and will not suffer from withdrawal of the rebate. But if the sterling price under the contract was subject to conversion into dollars at the current rate, the supplier receives only 240 dollars, the present rate after devaluation, and would suffer on withdrawal of the rebate. He accordingly receives the concession proposed under subsection (2A) of the Amendment.
7.0 p.m.
There are reverse sorts of combinations of currencies and prices payable. These are dealt with under subsection (2B). For example, a contract is priced not in sterling but at 280 dollars. If that price is payable in sterling and no provision exists to convert the price into sterling at the pre-devaluation rate the supplier will receive nearly£120 instead of the£100 that he would have received formerly. The withdrawal of the rebate will, therefore, not cause him any hardship


and he therefore receives no concession. But if this 280 dollars price has to be converted into sterling payment at the pre-devaluation rate, he will receive only£100 and will, therefore, suffer from the withdrawal of rebate in the absence of any contractual provision for it. He therefore receives the concession.
On the other hand, if a contract priced at 280 dollars is payable in dollars, this would normally reap the supplier a gain on devaluation in terms of the new sterling equivalent of the dollar payment, but it' such a contract priced and payable in dollars provides that the price payable is to be reduced on a change in the sterling exchange rate, the gain will be eliminated. The supplier gets no gain. If the contract does not also cater for the withdrawal of the rebate, the supplier would therefore suffer unless he receives the concession we provide for in subsection (2B).
The Government Amendments therefore represent an attempt to extend the concession so that it relieves cases of hardship which have arisen and are not embraced as the Clause stands at present. In this respect the Government Amendments go further than the case covered by the Amendment put forward by the hon. Member for Mid-Bedfordshire.
At the same time, the Government Amendments remove an anomaly that at present arises under the Clause—an anomaly which the hon. Member's Amendment would not remove—whereby some cases that benefit from devaluation would remain eligible for rebate.
I am told that this represents only a small area of activities, and we have put that right. Most important, we have covered the issue raised by th hon. Member and in putting down our own Amendments we have sought this opportunity to meet many cases which have been brought to our attention. We are, therefore, carrying the concession further than is proposed by the hon. Member.

Mr. Higgins: The Committee is most grateful to the Minister for the extremely lucid way in which he has explained the Amendments. We also thank my hon. Friend for the great trouble he has taken in putting down his Amendment. In terms of comprehensibility, my hon.

Friend's Amendment seems preferable to those of the Government. Perhaps we may probe a little further in order to see whether that is the case. The Minister says that my hon. Friend's Amendment would widen the concessions for pre-devaluation contracts, and then says that the Government Amendments would widen them even more.
I want to run quickly over the ground that has been covered. The Minister identified four cases—first, the case where a firm does not gain from devaluation in terms of pounds, in which case people should still get the rebate; secondly, the case where a firm does gain from devaluation, in which case the firm should not gain; then, thirdly, there are the reversals of the release, so that if the gain is eliminated the firm gets the rebate and, fourthly, if the gain is not eliminated it does not get the rebate.
This raises a rather important point of principle. As I understand it, the question whether a company does or does not get a rebate is to be determined by the outcome in the post-devaluation period, not on the basis of when the contract was made—which is the criterion laid down in the rest of the Bill—but on the date the money was converted. That is a different principle and it is questionable whether it is a right one.
Should not we be concerned, as we are in other parts of the Bill, with the question when the contract was made, whether it was a firm one in writing, and so on—rather than the question whether, after the devaluation period, the company should or should not have a rebate, depending on what it got in pounds sterling? All these were contracts entered into in good faith before the date of devaluation as well as following it. Perhaps the Minister will comment on this point. It is a complicated matter, and I should be glad to be told what principles the Government are applying.
Secondly, my hon. Friend pointed out that there were two distinctions between the Government Amendments and his. The first was that the Government Amendments apply only in the case of a reduction in the amount payable in sterling, when the contract should be expressed in that way. We can understand, for the reason that we have been discussing, why the Government want to


do it that way, but is it not conceivable that a contract may not have been expressed in that way? It may have been expressed either in terms of gain or of loss. The Government say that everything is all right, but a contract may have given a two-way option, and if the contract was expressed in that way the Government Amendment will not cover the case.
Thirdly, as the right hon. Gentleman defined it, the Government Amendments refer to contracts stipulating that there is no prevision for the alteration of the terms of the contract on the withdrawal of the export rebate, whereas my hon. Friend's Amendment makes no reference to export rebates. We are not clear why the Government should specify that. I should be very surprised if any such contract existed. I would not have thought that anyone would have entered into such a contract, even with the greatest foresight. Has the Minister any experience of any such contracts having been made?
Finally, I want to raise a relatively simple question. The right hon. Gentleman says that the Government Amendments go far wider than my hon. Friend's Amendment. Are there any respects in which my hon. Friend's Amendment goes wider than the Government Amendments?

Mr. Darling: On the last point, I do not think that the hon. Gentleman's Amendment goes further than the Government Amendment in any respect. That is the best answer I can give, off the cuff, after some examination and discussion of the matter.
As for the date of conversion, that date governs whichever rate applies whether pre-devaluation or post-devaluation. This, in turn, governs the question whether the benefit accrues from devaluation. If it does the exporter does not need the rebate for his gain, more than to offset loss of such a rebate. Therefore, it depends on the terms of the contract whether the date of the conversion of the currencies is pre-devaluation or post-devaluation.
In the question of a contract providing for the two-way option the hon. Gentleman asked whether I knew from experience of any contracts that did not contain Provision for the elimination of the

rebate. Offhand, I cannot answer that question. I do not know of any contracts that would provide for the two-way option, but before the end of the debate I shall try to answer that question and the hon. Gentleman's reference to the export rebate.

Mr. Hastings: I am grateful to the right hon. Gentleman for his considerable exposition of a most complicated matter, and to my hon. Friend the Member for Worthing (Mr. Higgins) for probing further, and bringing out one or two important and substantial points that I had not myself mentioned. I am inclined to accept the Minister's assurance that his Amendment covers the point I have in mind, which turns out to be only one of several aspects—and that his Amendment does in some respects go further than mine. Naturally, I also accept the fact that there may be defects of drafting in my Amendment which are not apparent.
Perhaps I should also add a certain apology that in my ignorance I had felt the first half of the right hon. Gentleman's Amendment was due to suspicion in the Board of Trade about what exporters might be up to, instead of making constructive proposals for carrying my own Amendment further.
In those circumstances, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 20, in page 3, line 19, leave out paragraphs (b) and (c) and insert:

(b) that the contract satisfies the conditions in subsection (2A) or as the case may be subsection (2e) below.—[Mr. Darling.]

Mr. lain Macleod: I beg to move Amendment No. 14, in page 3, line 25:
Provided that subsection (1) above shall not apply if the Board of Trade are satisfied that the relevant transaction arises out of an irrevocable bid or tender submitted before 19th November 1967 and that the terms of such bid or tender could not be renegotiated.
I regard this as the most important Amendment of those we are discussing. It deals with the question of irrevocable bids and tenders which, together with the question of oral contracts, was referred to by myself in the Second Reading debate on 8th February. The reply given by the Financial Secretary could scarcely have been more favourable. Part of it


has been quoted already, but at the end he said:
We shall continue independently to seek such a solution. It is gratifying that the right hon. Gentleman will attempt such a solution. We shall certainly look on any Amendment put forward and will not turn them aside too lightly.
The same point goes to irrevocable tenders as to oral agreements. The question of contracts which are in honour binding on a British firm will be looked at too because we are not anxious to quibble or make pedantic objections to exclude these contracts."—[OFFICIAL REPORT, 8th February, 1968; Vol. 758, c. 781.]
Personally, I was delighted, and I think the House was, to hear those words and we expected that in regard both to the oral contract and the irrevocable bid and tender, suitable Government Amendments would be tabled.
In fact, neither of such Amendments has appeared. We have dealt with the question of an oral contract. The right hon. Gentleman said that he was very sympathetic, as he always is, but that the Government could not find a way of achieving what they wanted to achieve in the form of an Amendment, but that much of what we wanted could be done by the Bill as it is. I think that that is a fair summary of his argument.
7.15 p.m.
We did not find it satisfactory, for the reasons given by my right hon. and learned Friend the Member for Hertford-shire, East (Sir D. Walker-Smith), and we divided the Committee. We shall certainly do that again unless the Minister is prepared on the irrevocable bid or tender, not to give us some assurance that the administration will be sympathetic—I am sure that it will be—but to write into the Bill something that will bring some comfort to those who find themselves in a difficult position as a result of devaluation and the various actions that have stemmed from it.
If I may say so—and I do not in the slightest way intend to be patronising to the right hon. Gentleman—when a guarantee, as I regard it, is given by the Financial Secretary to the Treasury, the right thing for the Minister to do is to write a short minute to his Department saying, "This is a good point and we must meet it. Tell me how." And that will always be done. But if one has an

elaborate argument for and against, all sorts of considerations—including pride of authorship in the Bill—come into play, and one is apt to land up with what I would call the sort of unhappy answer we had on the last point.
I say that by way of introduction: the point itself I can put fairly briefly. It arises out of the length of time that often occurs between a bid and the time that a contract comes to fruition. I take as my first example an extract from a letter sent to one of my colleagues from the Leeds Incorporated Chamber of Commerce. It states:
…I have before me a tender of an approximate value of£750,000 to an overseas Government which was dated 7th June, 1966. It was accepted by cable dated 9th August, 1967, confirmed by letter dated 13th October, 1967. Further correspondence and cables followed to finalise details…
and a letter
offered 'further help in drawing up the final Agreement to reflect this Contract.' This was sent on 10th November.
It may be that the right hon. Gentleman will answer—and, of course, he can have details of the case if he wishes—that this case is one in which the President of the Board of Trade could accept, in spite of the strict wording of the Measure, the clear intention of the overseas client and the person putting the tender in this country, but there are a number of other possibilities which perhaps it would be as well to bring forward.
The second type of transaction is that which relates to a tender submitted before 19th November, 1967 but accepted after that date. The written contract of sale will come later and, indeed, may not yet have arrived. It is important to realise in this case that these difficulties often arise out of the tactics of the overseas purchaser, with which the bidder in this country, if he wants to get the order, simply has to comply. It is not a voluntary move on the part of the British exporter: if he wishes to obtain the order, he has very little alternative.
I give a third example. Let us suppose that a firm puts in a bid for an overseas order and that the period of the bid is, say, two months. Subsequently—and this happens very frequently—the prospective purchaser says that he needs a little longer—perhaps another month—to make up his mind and pays a sum—it may be quite small; say£100—to keep


the tender open. My understanding of the law is that if that sum is accepted it binds both parties to the terms of the tender and the British exporter's bid for it. He is therefore bound, not just in honour but by a contract that can be enforced, to a bid which has taken into account such matters as the export rebate which may well not be able to figure in his final calculations.
I am assured that in Scottish law all tenders could be held to be binding without any consideration whatever, but I do not invite the right hon. Gentleman to go into the complications of Scottish law. I do not understand it myself; I have enough to do trying to sort out what we think English law may be in relation to irrevocable bids and tenders. Frequently these matters arise from the tactics of the overseas purchaser. As we read the Bill, unless an Amendment of some sort—as usual, one is not wedded to the particular words on the Notice Paper—is inserted, there may well be considerable difficulty in a firm in this country obtaining the export rebate.
I have just been given an illustration of the firm of Stothert and Pitt, crane makers of Bath, who lodged a firm and bone fide tender with a Brazilian public authority for the supply of five cranes. The value of the tender was about£750,000. The firm holds a letter of intent issued by the Brazilian authority within the validity of the tender, although no formal contract has yet been signed, and the export rebate would have been about 2 per cent. of the f.o.b. value at the time of the shipment. I dare say hon. Members on both sides of the Committee could multiply examples of this kind, but I do not think that is necessary: I think I have said enough to show that a problem does exist. It is common ground between us that we want to find an answer, but so it was last time, and this time we must press the right hon. Gentleman to go a little further and to put something into the Bill. If he cannot do that now because there may not be a Report stage, it could be done in another place.
According to our reading of the law and of the Bill—the Financial Secretary did not dissent from this—irrevocable bids and tenders are not covered by Clause 2. Yet these bids are often for very large sums of money and the period

it takes to bring the contract to fruition is often measured in years rather than in months. This is a situation which both sides of the Committee want to improve. We feel strongly that it should be met by an Amendment to the Bill.

Darling: This is where I proceed to stumble through the jungle of the law of contract without the guidance of the Financial Secretary who is unable to be here today and whose presence I would wish to have. I have discussed the whole matter with our legal advisers and I hope that I can reply sensibly to the right hon. Gentleman. I say at once that the undertakings given by the Financial Secretary were carried out. We have tried to find a way out, as I think the right hon. Gentleman will appreciate when I pursue the arguments before me.
Let us be clear that we are discussing an Amendment which says that the conditions we have laid down to get the concessions and so on will apply—
Provided that subsection (1) above shall not apply if the Board of Trade are satisfied that the relevant transaction arises out of an irrevocable bid or tender submitted before 19th November 1967 and that the terms of such bid or tender could not be renegotiated.
The effect of the Amendment would be to allow rebate to be payable on exports made after 31st March under contracts entered into at any time after devaluation, as long as the contracts in question were the subject of irrevocable pre-devaluation bids or tenders in terms which could not be renegotiated. We have obviously to stick to the words of the Amendment. Such a widening of the scope of the concession would not only render rebate payable for an indeterminate period on an indeterminate number of transactions, depending when and how many of the bids and tenders in question resulted in firm business: it would also be extremely difficult—in fact impossible—to administer, since the onus of deciding whether the bids and tenders were irrevocable and whether they could not be renegotiated would fall on the Board of Trade.
I hope that the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) agrees that whether a bid or tender is irrevocable is a question of law, not of evident fact, and is only to be determined with certainty by the courts. By no means all irrevocable bids


and tenders are accompanied by a financial bond as a warranty of intent, so that could not be used as a distinguishing mark an irrevocable contract in all cases. In attempting to make a distinction, the Board of Trade would be drawn into a most complex field of contract law, where administrative decisions have no proper place.
If, in order to avoid this problem, the Bill were to be widened still further so that all bids and tenders were eligible without regard to whether they could be revoked or not, the door would be wide open to every sort of negotiation current at devaluation—and the provision would thereby be open to every sort of abuse, since evidence of negotiation would be as easy to manufacture as it would be impossible to refute.
We have given a great deal of serious consideration to the possibility of devising some provision to deal with the problem for which the right hon. Gentleman seeks to cater. The conclusion is inescapable, however, that it is impossible to devise a practical solution. In the half dozen or so cases of bids, tenders, offers, letters of intent and so forth which have so far come to light, the question of irrevocability has been far from clear-cut.
In the normal course, an offer or a tender with a specified time limit in which it may be accepted is not irrevocable; it may be withdrawn at any time during its currency. Even when the offer or tender has become the subject of a letter of intent by the buyer, it is far from certain whether, simply by that token a legally binding contract exists. Usually, the contract itself has still to be negotiated in detail—a process which often takes many months after a letter of intent has been issued. It is certainly not unknown, moreover, for a buyer who has issued a letter of intent to a bidder, to fail to conclude the subsequent contract. The buyer may simply not pursue the business at all, or he may place it with a supplier other than the one to whom he issued the letter of intent. If the buyer can withdraw in this way, so, too, can the supplier, whatever they may have said to each other in letters of intent and whatever tenders may have been submitted.

7.30 p.m.
Throughout the whole of this area of contract—I do not have sufficient practical experience to enable me to pretend that I am an expert—the legal nature, I am advised, of whatever commitment may have been entered into, short of a fully-fledged contract of sale, can be determined with finality only by a court of law. The Board of Trade can clearly not afford to apply the concession to anything less than a commitment which, in law, is a contract binding both parties without qualification. As I have said, if the concession were so applied in circumstances where the would-be supplier could in law withdraw, all firms with any sort of negotiation on hand before devaluation, would also be entitled to the benefit of rebate. It is, therefore, vital to draw the line at contracts of sale made before devaluation.
This in itself is already a substantial concession, since changes of policy in fiscal matters do not normally make exception for business currently in hand. Thus, for example, when the rebate was first introduced, firms with business on hand benefited from it immediately and will now also receive the benefits of the concession on eligible pre-devaluation contracts.
Under the subsection as drafted, where the goods are exported pursuant to a written contract the Board of Trade's function is confined to certifying the matters specified in the subsection—that is, that the contract was made before 19th November, 1967, that the price for the goods was payable in sterling, and that it was not subject to alteration on a change in the exchange rate of sterling. Admittedly, before the Board can certify those matters it must be reasonably satisfied that there is a contract, and for that purpose it will have to look at all the documents which the exporter produces with his application.
It will not always be an easy task to be absolutely certain that there is a contract and, where the contract is by correspondence, there may be doubtful cases, but these will be on the borderline. It should be reasonably practicable in the generality of cases to reach a broad conclusion as to the existence of a contract and to distinguish those cases


in which the basic elements of offer and acceptance of the essential terms are missing.
In those cases where the Board cannot accept that there is a contract, the exporter is entitled in the last resort to appeal to the courts, and if the courts take a different view the Board will have to look at the matter again and consider whether it can certify in accordance with the subsection.
The view that I am advised to give to the Committee is that to extend the subsection to take in irrevocable bids or tenders the terms of which could not be re negotiated would be impose upon the Board an impracticable function which is clearly one which can be properly discharged only by the courts. The Amendment does not seek to define what is an irrevocable bid or tender and it would leave the Board to determine in all the difficult circumstances of cases such as these whether on the known facts the bids or tenders could or could not be renegotiated. We believe that this is a task for an expert tribunal possessing all the necessary qualifications of skill and experience. Moreover, whereas in the case of contracts the difficulties of construction will arise only on the borderline and in relatively few cases, in the case of irrevocable bids and tenders the difficulties must in the nature of things arise in every case.
It is regrettable that in our endeavour to soften the blow to transactions in the pipeline on devaluation we cannot go beyond written contracts or the contracts we spoke about when we discussed oral contracts. If there are to be concessions, we have to accept that the machinery must be administrative and not judicial. For the reasons which I have already given, if we try to impose on the administrative machinery a task which can be discharged only by a judicial tribunal, that machinery must break down and make the operation of these concessions impracticable.
Far these reasons, I must advise the Committee to reject the Amendment.

Sir D. Walker-Smith: The right hon. Gentleman has made his case on the basis of the administrative difficulties and has suggested that, if the Amendment were incorporated into the Bill, the

Board of Trade would have to in effect discharge functions that properly rest with the courts. The right hon. Gentleman was good enough to say that he hoped that I would agree that the interpretation of these matters was a matter of law. That is so. The construction of documents is a matter of law and is for the courts.
When the right hon. Gentleman developed his argument, he was obliged to concede that the Bill already puts upon the Board of Trade the duty of deciding whether certain agreements are in fact enforceable contracts in law. This is also a function for the courts, but it is one that the right hon. Gentleman has accepted for the Board of Trade in the context of the Bill. He seeks to get out of that dilemma by saying, "But in the case of contracts most of them would be fairly clear and it would not arise very often". That is a good classic defence of the housemaid's baby type brought into these contractual considerations.
Although I am not wedded to the wording of the Amendment, as my right hon. Friend is not, I still find difficulty in understanding why the principle should be unacceptable. If a tender is made without any qualification as to time, it is revocable at any time before there is a sufficient acceptance by the purchaser of the offer. As I understand it, the Amendment is directed to the case where there is included in the invitation to tender a condition that the tender, once made, shall be, as it were, left on the table and not be open to amendment for a given period. If such a condition is expressed in the invitation to tender, the tender is made subject to that condition and an acceptance can be made at any time within that defined time limit and such acceptance means that a contract is formally concluded between the parties. That is my understanding of what my right hon. Friend means by an irrevocable tender.
It is true that the purchaser is not bound to the individual tenderer during that period, because a condition is put by the purchaser into the invitation to tender to secure his own position. The fact that he is not bound does not mean that he is not able to bind the tenderer by an acceptance of his tender within the unconditional time limit which is contained in the invitation to tender. As


I understand it, that is the case which my right hon. Friend puts forward. It seems to be a valid case. I cannot see why there should be this great difficulty in construing the documents to see whether there is such a time limit making the tender irrevocable within that period. It may have to go to the courts for final determination by them, but so may the contracts which already figure in the Bill. Therefore, the principle of the Amendment is valid and not to be negatived by any argument so far put forward.
I am not very happy about the final words of the Amendment, "could not be renegotiated". Anything can be renegotiated subject to the agreement of the parties. Therefore, I think that the words as they stand are not apt to express what I imagine my right hon. Friend's meaning to be. What I understand to be intended here is that there can be no unilateral right to renegotiate, that is, to make an amendment of the tender by the tenderer without the agreement of the purchaser. But these are matters which, as my right hon. Friend fairly said, can always be taken care of by the undoubted skill of Parliamentary draftsmen.
I do not know whether the Minister of State has brought conviction to my right hon. Friend's mind. He has not done so to my mind. He has made the matter out to be more difficult and complex than it would need to be, and I hope, therefore, that his reply is not the Government's final view on the Amendment.

Mr. Iain Macleod: I very much agree with what my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) has said. The righ thon. Gentleman has made this matter appear more difficult than it is, and I hope that he will think again. We shall vote in this House, but there is another place in which he can have second and, if I may say so, more courteous thoughts in relation to the House of Commons. I do not say that in any sense as a reflection on the speech which the right hon. Gentleman delivered. As usual, he went out of his way to be extremely sympathetic, but I must remind him of

the origin of this Amendment and of our debate upon it.
It is common that a member of the Government says, "There can be no commitment, but we shall look at this at the next stage of the Bill". One realises that they will look at it, but we have very little chance, if any, of getting what we propose. The Financial Secretary to the Treasury, however, went very much further. The hon. Gentleman said:
So far as the Government are concerned, it is our earnest wish to include"—
and so on—
We shall continue independently to seek such a solution…We shall certainly look on any Amendment put forward and will not turn them aside too lightly…The question of contracts which are in honour binding on a British firm will be looked at too because we are not anxious to quibble or make pedantic objections to exclude these contracts."—[OFFICIAL REPORT, 8th February, 1968; Vol. 758, c. 781–2.]
Any Parliamentarian listening to those words would unquestionably come to the conclusion that this point would be met. There is no other way in which the Financial Secretary's observations to the House of Commons could be honoured save by meeting the point.
It was not as though the Financial Secretary was responding off the cuff. I spoke at the beginning of the debate, and he made the final speech just before 10 o'clock. This was almost the last point he made at a minute or two before 10 o'clock. He had had the whole day, and I cannot believe that there was no consultation between the Treasury and the Board of Trade. Neither can I believe that those words of the Financial Secretary to the Treasury represent a view which the Board of Trade finds impossible to meet.
The Minister of State today spent a lot of his time—one always does this when one has a bad case—in criticising the drafting of the Amendment. This is absolutely irrelevant. The drafting of an Amendment put forward by the Opposition is a peg, an excuse, on which the House or its Committee debates these matters. This is well understood. It is understood also that, if the Government have the faintest intention of taking the point, they will apply their own incomprehensible words—all Governments do this—to what looks a comparatively simple matter. That is the way these


matters are dealt with. It has no relevance whatever to the important question of the irrevocable bid or tender to criticise or dogmatise about the actual wording proposed.
This is why my right hon. and learned Friend was entirely right in his general observations and in saying that the Government are making much too heavy weather of this. The right hon. Gentleman said that if my words were accepted—for the reasons I have given, the words themselves are not important—they would—I think that these were exactly his words—extend the Clause to put an impracticable function on the Board of Trade. Very well. If that is so as a matter of drafting, it becomes the right hon. Gentleman's business, in view of the undertaking—I can almost call it a promise—given by the Financial Secretary, to find words which would within the law put a practicable burden upon the Board of Trade. That is his job. It is what draftsmen and officials are there for and, above all, it is what Ministers are there for. This is why we find his answer so disappointing.
7.45 p.m.
We shall certainly vote now, but there is another place in which the Minister can have second and wiser thoughts. There is—I put it bluntly to him—an obligation upon the Government, in view of the words used by the Financial Secretary to the Treasury, to meet this point by devising an ideal method of drafting or as near ideal as his legal advisers can contrive. I very much hope that we have not heard the last word on the subject, even if it be the last word in this House.

Mr. Darling: First, may I reply to the question which the hon. Member for Worthing (Mr. Higgins) raised? We know of many contracts with provisions for a change in terms on a change in exchange rates, but we have not yet encountered any with provision for the withdrawal of rebate. They may exist. They probably do. But it is our view that they should not attract the concession.
In reply to the right hon. Member for Enfield, West (Mr. Iain Macleod) I say at once that I have never from this side of the House attacked the drafting of Opposition Amendments. I have always

dealt with them as I dealt earlier today with the Amendment put forward by the hon. Member for Mid-Bedfordshire (Mr. Hastings), accepting that the drafting of Amendments, as I know from my own bitter experience on the Opposition side, is a difficult operation.
My comment about the drafting of this Amendment was that it was clear. It is a short and clear Amendment:
Provided that subsection (1) above shall not apply if the Board of Trade are satisfied that the relevant transaction arises out of an irrevocable bid or tender submitted before 19th November 1967 and that the terms of such bid or tender could not be renegotiated.
There is nothing wrong with the drafting. I take it to express the purposes and views of the right hon. Gentleman and his hon. Friends.
The right hon. Gentleman attacked my hon. Friend the Financial Secretary for, in his view, giving a specific assurance that Amendments would be put forward to cover this question of irrevocable bids which cannot he renegotiated. But the right hon. Gentleman did not quote the full passage. What my hon. Friend said was:
The next question is, will we extend the benefit given to written contracts entered into before devaluation to irrevocable dates and tenders? I should like to make clear to the House that the only considerations we have had in dealing with this matter are the necessity for proof of the contract having been entered into before the devaluation date and practicability in administering public funds. That is to say, we have to have some means whereby we can check whether or not a contract qualifies.
He said a little later:
The question of contracts which are in honour binding on a British firm will be looked at too because we are not anxious to quibble or make pedantic objections to exclude these contracts."—[OFFICIAL REPORT, 8th February, 1968; Vol. 758, c. 718–2]
They have been looked at. Just as the right hon. Gentleman asks us to be forthcoming in trying to carry out our apparent undertakings, I ask him to accept that when we give undertakings of that kind we try to carry them out. That undertaking has been carried out. We have examined the contracts and looked into the question very carefully and have come to the conclusion that, to quote right hon. Gentleman's own words, we cannot find words within the law which carry out these wishes; we have come to the conclusion that these


matters can be determined only in a court of law. They cannot be determined by administrative action by the Board of Trade.
The right hon. and learned Member for Hertfordshire, East (Sir W. Walker-Smith) said that we are accepting the administrative responsibility, if I may put it in that way, for somewhat similar legal matters, which I say should be determined in a court of law. I think that the answer is that it is not quite like turning the baby out with the bath water because it is only a little one. The matters to which I referred before are matters where, with the facts before one, one can determine whether there is evidence of an undertaking that leads to a written contract. There will be very few borderline cases. Anybody who

disputes the Board of Trade's decision can go to law to decide whether the Board of Trade is right or wrong. We are not preventing them from doing that. But every single one of these cases would be in the category where, in our view, the determination of whether the tenders or bids are associated with a written contract must be decided in a court of law.

I repeat that we sincerely tried to meet the views which the right hon. Gentleman expressed on Second Reading. I think that we have faithfully carried out the undertaking which my hon. Friend the Financial Secretary gave.

Question put. That the Amendment be made:—

The Committee divided: Ayes 118, Noes 167.

Division No. 57.]
AYES
[7.55 p.m.


Alison, Michael (Barkston Ash)
Harrison, Col. Sir Harwood (Eye)
Onslow, Cranley


Allason, James (Hemel Hempstead)
Hastings, Stephen
Osborne, Sir Cyril (Louth)


Astor, John
Heald, Rt. Hn. Sir Lionel
Page, John (Harrow, W.)


Atkins, Humphrey (M't'n &amp; M'd'n)
Higgins, Terence L.
Peel, John


Awdry, Daniel
Hiley, Joseph
Percival, Ian


Baker, W. H. K.
Hill, J. E. B.
Pike, Miss Mervyn


Balniel, Lord
Holland, Philip
Pink, R. Bonner


Barber, Rt. Hn. Anthony
Hordern, Peter
Pounder, Rafton


Beamish, Col. Sir Tufton
Howeil, David (Guildford)
Powell, Rt. Hn. J. Enoch


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Hunt, John
Pym, Francis


Biffen, John
Hutchison, Michael Clark
Ramsden. Rt. Hn. James


Biggs-Davison, John
Iremonger, T. L.
Renton, Rt. Hn. Sir David


Birch, Rt. Hn. Nigel
King, Evelyn (Dorset, S.)
Rossi, Hugh (Hornsey)


Bossom, Sir Clive
Kitson, Timothy
Russell, Sir Ronald


Boyd-Carpenter, Rt. Hn. John
Knight, Mrs. Jill
Scott, Nicholas


Brown, Sir Edward (Bath)
Lancaster, Col. C. G.
Shaw, Michael (Sc'b'gh &amp; Whitby)


Bruce-Gardyne, J.
Legge-Bourke, Sir Harry
Silvester, Frederick


Bryan, Paul
Lewis, Kenneth (Rutland)
Sinclair, Sir George


Burden, F. A.
Loveys, W. H.
Steel, David (Roxburgh)


Carlisle, Mark
Luard, Evan
Stoddart-Scott, Col. Sir M. (Ripon)


Chichester-Clark, R.
Lubbock, Eric
Taylor, Sir Charles (Eastbourne)


Corfield, F. V.
McAdden, Sir Stephen
Taylor,Edward M.(G'gow,Cathcart)


Costain, A. P.
Mackenzie, Alasdair(Ross&amp;Crom'ty)
Taylor, Frank (Moss Side)


Davidson,James(Aberdeenshire,W.)
Maclean, Sir Fitzroy
Temple, John M.


d'Avigdor-Goldsmid, Sir Henry
Macleod, Rt. Hn. Iain
Thatcher, Mrs. Margaret


Dean, Paul (Somerset, N.)
McMaster, Stanley
Thorpe, Rt. Hn. Jeremy


Deedes, Rt. Hn. w. F. (Ashford)
Maddan, Martin
Turton, Rt. Hn. R. H.


Dodds-Parker, Douglas
Maginnis, John E.
van Straubenzee, W. R.


Doughty, Charles
Mawby, Ray
Walker-Smith, Rt. Hn. Sir Derek


Elliot, Capt. Walter (Carshalton)
Maxwell-Hyslop, R. J.
Walters, Dennis


Errington, Sir Eric
Mills, Peter (Torrington)
Ward, Dame Irene


Eyre, Reginald
Miscampbell, Norman
Webster, David


Farr, John
Mitchell, David (Basingstoke)
Wills, Sir Gerald (Bridgwater)


Fortescue, Tim
Monro, Hector
Wilson, Geoffrey (Truro)


Glover, Sir Douglas
Montgomery, Fergus
Worsley, Marcus


Glyn, Sir Richard
More, Jasper
Wylie, N. R.


Gower, Raymond
Mott-Radclyffe, Sir Charles



Grant, Anthony
Munro-Lucas-Tooth, Sir Hugh
TELLERS FOR THE AYES:


Harris, Frederic (Croydon, N.W.)
Murton, Oscar
Mr. R. W. Elliott and


Harris, Reader (Heston)
Noble. Rt. Hn. Michael
Mr. Bernard Weatherill.


Harrison, Brian (Maldon)
Nott, John





NOES


Albu, Austen
Baxter, William
Brooks, Edwin


Allaun, Frank (Salford, E.)
Bishop, E. S.
Brown, Hugh D. (G'gow, Provan)


Alldritt, Walter
Blackburn, F.
Brown,Bob(N 'c'tle-upon-Tyne, W.)


Atkins, Ronald (Preston, N.)
Booth, Albert
Brown, R. W. (Shoreditch &amp; F'bury)


Atkinson, Norman (Tottenham)
Boyden, James
Buchan, Norman


Bagier, Gordon A. T.
Braddock, Mrs. E. M.
Butler, Herbert (Hackney, C.)


Barnett, Joel
Bray, Dr. Jeremy
Butler, Mrs. Joyce (Wood Green)




Castle, Rt. Hn. Barbara
Henig, Stanley
Orme, Stanley


Coe, Denis
Herbison, Rt. Hn. Margaret
Oswald, Thomas


Concannon J. D.
Horner, John
Owen, Dr. David (Plymouth, S'tn)


Conlan, Bernard
Howarth, Robert (Bolton, E.)
page, Derek (King's Lynn)


Craddock, George (Bradford, S.)
Howell, Denis (Small Heath)
Panneli, Rt. Hn. Charles


Crawshaw, Richard
Hoy, James
Park, Trevor


Grossman, Rt. Hn. Richard
Hughes, Emrys (Ayrshire, S.)
Parker, John (Dagenham)


Cullen, Mrs. Alice
Hughes, Hector (Aberdeen, N.)
Pearson, Arthur (Pontypridd)


Dalyeli, Tam
Hughes, Roy (Newport)
pentland, Norman


Darling, Rt. Hn. George
Hunter, Adam
Perry, Ernest G. (Battersea, S.)


Davidson, Arthur (Accrington)
Hynd, John
Perry, George H. (Nottingham, S.)


Dell, Edmund
Irvine, Sir Arthur
Prentice, Rt. Hn. R. E.


Dempsey, James
Jackson, Peter M. (High Peak)
Price, Christopher (Perry Barr)


Dewar, Donald
Jenkins, Hugh (Putney)
Price, Thomas (Westhoughton)


Diamond, Rt. Hn, John
Jones, Dan (Burnley)
Price, William (Rugby)


Dickens, James
Jones, Rt.Hn.SirElwyn(W. Ham, S.)
Reynolds, G. W.


Dobson, Ray
Judd, Frank
Rhodes. Geoffrey


Doig, Peter
Kelley, Richard
Robinson, W. 0. J. (Walth'stow, E.)


Dunnett, Jack
Lawson, George
Rose, Paul


Eadie, Alex
Lee, Rt. Hn. Frederick (Newton)
Ross, Rt. Hn. William


Edwards, Robert (Bilston)
Lee, Rt. Hn. Jennie (Cannock)
Shaw, Arnold (llford, S.)


Ellis, John
Lestor, Miss Joan
Sheldon, Robert


English, Michael
Lewis, Ron (Carlisle)
Short,Rt.Hn.Edward(N'c'tle-u-Tyne)


Ensor, David
Lomas, Kenneth
Silkin, Hn. S. C. (Dulwich)


Evans, Albert (Islington, S.W.)
Loughlin, Charles
Silverman, Julius (Aston)


Faulds, Andrew
Lyons, Edward (Bradford, E.)
Slater, Joseph


Fernyhough, E.
McBride, Neil
Spriggs, Leslie


Fitch, Alan (Wigan)
McCann, John
Swain, Thomas


Fletcher, Raymond (Ilkeston)
MacColi, James
Swingler, Stephen


Fletcher, Ted (Darlington)
McGuire, Michael
Symonds, J. B.


Foley, Maurice
Mackenzie, Gregor (Ruttherglen)
Tomney, Frank


Foot, Michael (Ebbw Vale)
Maclennan, Robert
Urwin, T. W.


Fowler, Gerry
MacPherson,, Malcolm
Varley, Eric G.


Fraser, John (Norwood)
Mahon, Peter (Preston, S.)
Wainwright, Edwin (Deame Valley)


Garrett, W. E.
Manuel, Archie
Walker, Harold (Doncaster)


Ginsburg, David
Mapp, Charles
Wallace, George


Gourlay, Harry
Marks, Kenneth
Watkins, Tudor (Brecon &amp; Radnor)


Gray, Dr. Hugh (Yarmouth)
Mason, Rt. Hn. Roy
Wellbeloved, James


Gregory, Arnold
Maxwell, Robert
Whitaker, Ben


Grey, Charles (Durham)
Millan, Bruce
Wilkins, W. A.


Grifiths, David (Rother Valley)
Mitchell, R. C. (S'th'pton, Test)
Willey, Rt. Hn. Frederick


Griffiths, Rt. Hn. James (Llanelly)
Molloy, William
Williams, W. T. (Warrington)


Grifliths, Will (Exchange)
Morgan, Elystan (Cardiganshire)
Willis, George (Edinburgh, E.)


Hamilton, James (Bothwell)
Morris, Charles R. (Openshaw)
Wilson, William (Coventry, S.)


Hamling, William
Moyle, Roland
Woodburn, Rt. Hn. A.


Harper, Joseph
Murray, Albert
Woof, Robert


Harrison, Walter (Wakefield)
Noel-Baker,Rt.Hn.Philip(Derby,S.)



Haseldine, Norman
Oakes, Gordon
TELLERS FOR THE NOES:


Hazell, Bert
Ogden, Eric
Mr. loan L. Evans and


Heffer, Eric S.
O'Malley, Brian
Mr. Ernest Armstrong.

Amendment made: No. 21, in page 3, line 25, at end insert:

(2k) Where the price for the goods is expressed in sterling, the said conditions are that there is no provision for the alteration of the terms of the contract on a change in the exchange rate of sterling with any other currency or medium of exchange, or on the withdrawal of export rebates, and—

(a) either that the price for the goods is payable in sterling, or
(b) where the price for the goods is not payable in sterling, that there is no provision for the conversion of the expressed sterling price into the currency in which the price is payable to be at a rate of exchange which was the rate prevailing at some time before 19th November 1967.

(2B) Where the price for the goods is not expressed in sterling, the said conditions are—

(a) either that the price is payable in sterling and the contract provided for the conversion of the expressed price into sterling at a rate of exchange which was the rate prevailing at some time before 19th November 1967, or

(b) that the price is not payable in sterling and the contract provided for the price to be reduced on a change in the exchange rate of sterling with the currency in which the price is expressed.

and in either case that there is no provision for the alteration of the terms of the contract on the withdrawal of export rebates.—[Mr. Darling.]

Question put, That the Clause, as amended, stand part of the Bill:—

The Committee divided: Ayes 172, Noes 118.

Division No. 58.1
AYES
[8.4 p.m.


Albu, Auisten
Bagier, Gordon A. T.
Booth, Albert


Allaun, Frank (Salford, E.)
Barnett, Joel
Boyden, James


Alldritl, Walter
Baxter, William
Braddock, Mrs. E. M.


Armstrong, Ernest
Bishop, E. S.
Bray, Dr. Jeremy


Atkins, Ronald (Preston, N.)
Blackburn, F.
Brooks, Edwin




Brown, Bob(N'c'tle-upon-Tyne,W.)
Hazell, Bert
Ogden, Eric


Brown, Hugh D. (G'gow, Provan)
Heffer, Eric S.
O'Malley, Brian


Brown, R. W. (Shoreditch &amp; F'bury)
Henig, Stanley
Orme, Stanley


Buchan, Norman
Herbison, Rt. Hn. Margaret
Oswald, Thomas


Butler, Herbert (Hackney, C.)
Homer, John
Owen, Dr. David (Plymouth, S'tn)


Butler, Mrs. Joyce (Wood Green)
Howarth, Robert (Bolton, E.)
Page, Derek (King's Lynn)


Carmichael, Neil
Howell, Denis (Small Heath)
Pannell, Rt. Hn. Charles


Carter-Jones, Lewis
Hoy, James
Park, Trevor


Coe, Denis
Hughes, Emrys (Ayrshire, S.)
Parker, John (Dagenham)


Concannon, J. D.
Hughes, Hector (Aberdeen, N.)
Pearson, Arthur (Pontypridd)


Conlan, Bernard
Hughes, Roy (Newport)
Pentland, Norman


Craddock, George (Bradford, S.)
Hunter, Adam
Perry, Ernest G. (Battersea, S.)


Crawshaw, Richard
Hynd, John
Perry, George H. (Nottingham, S.)


Crossman, Rt. Hn. Richard
Irvine, Sir Arthur
Prentice, Rt. Hn. R. E.


Cullen, Mrs. Alice
Jackson, Colin (B'h'se &amp; Spenb'gh)
Price, Christopher (Perry Barr)


Dalyell, Tam
Jackson, Peter M. (High Peak)
Price, Thomas (Westhoughton)


Darling, Rt. Hn. George
Jenkins, Hugh (Putney)
Price, William (Rugby)


Davidson, Arthur (Accrington)
Johnson, James (K'ston-on-Hull, w.)
Reynolds, G. W.


Davies, Dr. Ernest (Stretford)
Jones, Dan (Burnley)
Rhodes. Geoffrey


Dell, Edmund
Jones, Rt. Hn. SirElwyn(W. Ham. S.)
Robinson, W. O. J. (Walth'stow, E.)


Dempsey, James
Jones, T. Alec (Rhondda, West)
Rose, Paul


Dewar, Donald
Judd, Frank
Ross, Rt. Hn. William


Dickens, James
Kelley, Richard
Shaw, Arnold (llford, S.)


Dobson, Ray
Lawson, George
Sheldon, Robert


Doig, Peter
Lee, Rt. Hn. Frederick (Newton)
Short, Rt.Hn.Edward(N'c'tle-u-Tyne)


Dunnett, Jack
Lee, John (Reading)
Silkin, Hn. S. C. (Dulwich)


Eadie, Alex
Lewis, Ron (Carlisle)
Silverman, Julius (Aston)


Edwards, Robert (Bilston)
Lomas, Kenneth
Slater, Joseph


Ellis, John
Loughlin, Charles
Spriggs, Leslie


English, Michael
Luard, Evan
Swain, Thomas


Ensor, David
Lyons, Edward (Bradford, E.)
Swingler, Stephen


Evans, Albert (Islington, S.W.)
McBride, Neil
Symonds, J. B.


Faulds, Andrew
McCann, John
Tomney, Frank


Fernyhough, E.
MacColl, James
Urwin, T. W.


Fletcher, Raymond (Ilkeston)
McGuire, Michael
Varley, Eric G.


Fletcher, Ted (Darlington)
Mackenzie, Gregor (Rutherglen)
Wainwright, Edwin (Dearne Valley


Foley, Maurice
Maclennan, Robert
Walker, Harold (Doncaster)


Foot, Michael (Ebbw Vale)
MacPherson, Malcolm
Wallace, George


Fowler, Gerry
Mahon, Peter (Preston, S.)
Watkins, Tudor (Brecon &amp; Radnor)


Fraser, John (Norwood)
Mal1alieu,J.P.W.(Huddersfield,E.)
Wellbeloved, James


Garrett, W. E.
Manuel, Archie
Whitaker, Ben


Ginsburg, David
Mapp, Charles
White, Mrs. Eirene


Gourlay, Harry
Marks, Kenneth
Wilkins, W. A.


Gray, Dr. Hugh (Yarmouth)
Mason, Roy
Willey, Rt. Hn. Frederick


Gregory, Arnold
Maxwell, Robert
Williams, W. T. (Warrington)


Grey, Charles (Durham)
Millan, Bruce
Willis, George (Edinburgh, E.)


Griffiths, David (Rother Valley)
Mitchell, R. C. (S'th'pton, Te$t)
Wilson, William (Coventry, S.)


Griffiths, Rt. Hn. James (Llanelly)
Molloy, William
Woodburn, Rt. Hn. A.


Griffiths, Will (Exchange)
Morgan, Elystan (Cardiganshire)
Woof, Robert


Hamilton, James (Bothwell)
Morris, Charles R. (Openshaw)



Hamling, William
Moyfe, Roland
TELLERS FOR THE AYES:


Harper, Joseph
Murray, Albert
Mr. Alan Fitch and


Harrison, Walter (Wakefield)
Noel-Baker, Rt.Hn.Philip(Derby,S.)
Mr. loan L. Evans.


Haseldine, Norman
Oakes, Gordon





NOES


Alison, Michael (Barkston Ash)
Elliot, Capt. Walter (Carshalton)
Kitson, Timothy


Allason, James (Hemnel Hempstead)
Elliott,R.W.(N'c'tle-upon-Tyne,N.)
Lancaster, Col. C. G.


Astor, John
Errington, Sir Eric
Legge-Bourke, Sir Harry


Awdry, Daniel
Farr, John
Lewis, Kenneth (Rutland)


Baker, W. H. K.
Fortescue, Tim
Loveys, W. H.


Balniel, Lord
Foster, Sir John
Lubbock, Eric


Barber, Rt. Hn. Anthony
Glover, Sir Douglas
McAdden, Sir Stephen


Beamish, Col. Sir Tufton
Glyn, Sir Richard
Mackenzie, Alasdair(Ross&amp;Crom'ty)


Biffen, John
Gower, Raymond
Maclean, Sir Fitzroy


Biggs-Davison, John
Grant, Anthony
Macleod, Rt. Hn. Lain


Birch, Rt. Hn. Nigel
Harris, Frederic (Croydon, N.W.)
McMaster, Stanley


Bossom, Sir Clive
Harris, Reader (Heston)
Maddan, Martin


Boyd-Carpenter, Rt. Hn. John
Harrison, Brian (Maldon)
Maginnis, John E.


Brown, Sir Edward (Bath)
Harrison, Col. Sir Harwood (Eye)
Mawby, Ray


Bruce-Gardyne, J.
Hastings, Stephen
Maxweil-Hyslop, R. J.


Bryan, Paul
Heald, Rt. Hn. Sir Lionel
Mills, Peter (Torrington)


Burden, F. A.
Higgins, Terence L.
Miscampbell, Norman


Carlisle, Mark
Hiley, Joseph
Mitchell, David (Basingstoke)


Chichester-Clark, R.
Hill, J. E. B.
Monro, Hector


Corfietd, F. V.
Holland, Philip
Montgomery, Fergus


Costain, A. P.
Hordern, Peter
More, Jacper


Davidson,James(Aberdeenshire,W.)
Howell, David (Guildford)
Mott-Radclyffe, Sir Charles


d'Avigdor-Goldsmid, Sir Henry
Hunt, John
Munro-Lucas-Tooth, Sir Hugh


Dean, Paul (Somerset, N.)
Hutchison, Michael Clark
Murton, Oscar


Deedes, Rt. Hn. W. F. (Ashford)
Iremonger, T. U.
Noble, Rt. Hn. Michael


Dodds-Parker, Douglas
Johnston, Russell (Inverness)
Nott, John


Doughty, Charles
King, Evelyn (Dorset, S.)
Onslow, Cranley







Osborn, John (Hallam)
Russell, Sir Ronald
Walker-Smith, Rt. Hn. Sir Derek


Osborne, Sir Cyril (Louth)
Scott, Nicholas
Walters, Dennis


Page, John (Harrow, W.)
Shaw, Michael (Sc'b'gh &amp; Whitby)
Ward, Dame Irene


Peel, John
Silvester, Frederick
Webster, David


Percival, Ian
Sinclair, Sir George
Wills, Sir Gerald (Bridgwater)


Pike, Mite Mervyn
Steel, David (Roxburgh)
Wilson, Geoffrey (Truro)


Pink, R. Bonner
Stoddart-Scott, Col. Sir M. (Ripon)
Woodnutt, Mark


Pounder, Rsfton
Taylor, Sir Charles (Eastbourne)
Worsley, Marcus


Powell, Rt. Hn. J. Enoch
Taylor,Edward M.(G'gow,Cathcart)
Wylie, N. R.


Prior, J. M. L.
Taylor, Frank (Moss Side)



Pym, Francis
Temple, John M.
TELLERS FOR THE NOES:


Ramsden. Rt. Hn. James
Thatcher, Mrs. Margaret
Mr. Bernard Weatherill and


Renton, Rt. Hn. Sir David
Turton, Rt. Hn. R. H.
Mr. Humphrey Atkins.


Rossi, Hugh (Homsey)
van Straubenzee, W. R.

Clause as amended, ordered to stand part of the Bill.

Clause 3.

(RE-INTRODUCTION OF EXPORT REBATES.)

Mr. Michael Alison: I beg to move Amendment No. 15, in page 3, line 39, leave out subsection (2).

The Temporary Chairman (Mr. J. C. Jennings): It would be convenient to discuss at the same time Amendment No. 16 standing in the name of the right hon. Member for Enfield, West (Mr. Iain Macleod), in page 4, line 25, leave out from "rebates" to "may" in line 26.

Mr. Alison: That would be convenient, Mt.. Jennings.
It is a piece of almost Pavlovian cruelty that the Minister of State, having spent the whole afternoon going through the severance agonies of the termination of the export rebate, should now have to extol the virtues of providing for its reintroduction. These two Clauses, containing the power simultaneously to terminate and to reintroduce the export rebate, surely constitute one of the weirdest conjunctions in Government legislation ever. It reminds me of the extraordinary instrument which the fabulous Dr. Strabismus, who invented a silent motor horn with the object of warning traffic without noise or disturbance. It was singularly ineffective and contradictory and that really reflects the juxtaposition of Clauses 2 and 3 of this Bill.
The difficulty is that we on this side have some doubt about the principle of the export rebate as such but, accepting the circumstances we are in today as being of a particular character. we believe that to sever it is a particularly ill-judged and ill-timed expendient. We know that the Government have done many things to counteract the effect of the alleged

bonus to come from devaluation—the extra vehicle charges they are imposing, the higher import costs of materials which go into our exports, and so forth—while the Six are introducing a value-added tax. In our opinion, therefore, the introduction of this Measure amounts to counting our chickens before they are hatched.
If the Government expect there to be a huge surge of exports they had better wait until that surge comes before they begin taking away benefits which exporters felt they had through the rebate. In practice, though not in principle perhaps, this is a foolish time to withdraw the export rebate. But having done that, to compound the folly by taking discretionary measures selectively to reintroduce it is to produce the worst of all worlds. It is bound to make enemies everywhere.
Because it is selective, it is bound to leave most British exporters unrequited because, in the nature of things, it will leave a lot of them out. At the same time, it will succeed in imposing a general statutory threat to all foreigners which they will all feel to be pointing specifically at them, as most people do when these rather dark provisions of a threatening character are imposed in legislation.
But to us the really bizarre aspect of the provision lies in the way in which the selectivity would work out. It is in the light of this and of the damage we think that this Measure will do to the spirit and letter of the G.AT.T. that we ask the Committee to reject Clause 3 as it stands and accept our Amendments in the absence of any further assurance from the right hon. Gentleman.
8.15 p.m.
I want to draw attention to some of the peculiar repercussions of the selectivity feature of Clause 3. Power selectively to bestow an advantage on a certain


country seems to be within subsection (3,c). If that is so, the provision is surely meaningless. If the country on which a selective benefit is bestowed is a signatory to the G.A.T.T. then. under the G.A.T.T., that selective benefit must be applied right across the board. In that case, what is the purpose of taking selective powers which must then be applied universally?
If the country concerned is not a signatory of the G.A.T.T., what is the point of applying unilateral benefits to a country from which there is no written-in reciprocity? This would only scandalise our co-signatories in the G.A.T.T. and to that extent lose an advantage in that selected country. Looking at the list of non-signatory countries, one wonders whether there is anything in this for us. It is a diverting pastime. Apart from the Eastern European countries, with which we must make special arrangements because it is impossible to tell whether they are discriminating unfairly or not, we find ourselves involved in possibly bestowing unilateral or one-sided or limited selective agreements with such small countries as Afghanistan, Costa Rica, even Lichtenstein and, most bizarre of all. the Vatican.
What purpose is there in taking special powers to enter into special beneficiary arrangements outside G.A.T.T. with the Vatican, probably annoying many other people in the process?
This sort of thing will arise under the selective provisions of the Clause. I suspect that attempting to bestow a selected advantage is not the purpose behind the Government's drafting. We have the evidence not only of the Prime Minister, but of the Chief Secretary from the way in which he handled this matter when he introduced the Bill. I suspect that the real purpose of this selectivity is not as an instrument to provide selected concessions to small non-members of G.A.T.T., but to be a form of tariff rearmament, and we object strongly to that. We believe that the Chief Secretary was much nearer the mark when on Second Reading he warned us of the dangers of any measures which smacked at all of tariff restriction, when he suggested that even the rebate was liable to do us more damage than good. Yet if

the Clause is a defence mechanism, a form of rearmament, a kind of self-defence against measures taken by other States, it is totally unsatisfactory.
I remind the Minister of State that it is completely against, if not the letter, then the spirit of G.A.T.T. to take unto ourselves power to reintroduce an export rebate, across the board or even selectively against certain members of G.A.T.T., as an instrument of retaliation. This is where the selectivity is so bizarre and inexplicable, because if it is a form of retaliation, it must be applied to all G.A.T.T. countries if it is in any sense to pass the test of whether it is a form of tariff discrimination. It must be applied universally. If it is to escape the charge of being simply a discriminatory tariff, a defence weapon, it must occupy the position which it at present occupies, namely, what the Government consider to be a legitimate kind of domestic instrument which is non-discriminatory and not against the rules of G.A.T.T. But if they propose to reintroduce it as a weapon of defence, they will run into all sorts of difficulties with G.A.T.T.
Is it proposed simply to introduce it as a weapon of selective defence against countries which are not signatories of G.A.T.T., which is the impression which we gained from the Financial Secretary? In a rather light-hearted aside, he observed that one very obvious example of the way in which the reintroduction of the export rebate would not be against G.A.T.T. would be its reimposition
…selectively in relation to countries which are not themselves subscribers to the G.A.T.T.…"—[OFFIcint, RFPORT, 8th February, 1968; Vol. 758, c. 781.]
If that is the purpose, it is a ludicrous situation.
Either the Government are correct in saying that the export rebate has a marginal effect on exporters and is therefore quite unimportant, in which case its selective reimposition as an offset to some act of discrimination by third countries, not members of G.A.T.T., will have no effect at all, because, by definition, it is an instrument which has no effect on exporters, or it is conceded, as it must be in logic from what the Government are doing in the Clause, that the export rebate will have an effect in offsetting some sort of discriminating or tariff restrictionist act by


a third country. Then the only effect of its reimposition, with a corresponding relief to exporters in respect of third countries, is to distort and divert trade precisely in the direction of the country against which it is aimed, because exporters will have a built-in incentive to claim the export rebate and to redouble their export efforts precisely in the direction of those countries which are discriminating against us.
The idea of the Government solemnly writing into our legislation, because they believe the export rebate to be an effective weapon of retaliation, a built-in incentive for this country to maximise its trade with countries such as Afghanistan, Costa Rica, El Salvador, Lichtenstein, Andorra and the Vatican precisely because those are third countries, non-signatories of G.A.T.T., which might enter into some sort of tariff restriction is too ludicrous to contemplate, and yet this is precisely the muddle into which the Government get with this kind of selectivity.
Either it is a non-discriminating non-tariff weapon to be universally applied in all circumstances, or it should be abandoned in total. To try to face both ways, to have a kind of Push-me-pull-you, to quote from the current "Dr. Dolittle" hit, to try to march in two different directions at the same time, will get the Government into a hopeless muddle. We hope that the Minister of State will give these Amendments the rational support which they deserve. Otherwise, we shall have to divide the Committee.

Mr. Nott: There has been something thoroughly obnoxious about the way in which the Government have handled the whole of this affair. There is plenty of evidence to suggest that in the talks before the devaluation of the£pressure was put on this country within the Group of Ten, probably from the United States and France, to abolish the export rebate in return for the acceptance by the Group of Ten of the rate of devaluation which we were proposing. There is evidence, too, that pressure came from the United States and France for the abolition of the rebate on condition that financial support to go with devaluation could be agreed. Certainly on my trips to the Continent when I have spoken about devaluation people in central banking have said quite

openly that pressure was put on this country to abolish this rebate for these reasons.
Having devalued and having got our financial support, which came to us from the Group of Ten and many countries who had long supported us in all the difficulties which we had faced over the previous 18 months, having had that co-operation, the Government, with thoroughly bad public relations, indicated that they were proposing to take powers to reimpose the rebate by means of an Order. Following devaluation, there was a wave of speculation against the dollar, and none of us in this country or anywhere else have anything to gain from that type of speculation. Understandably—indeed, it was overdue and badly needed—the U.S. Administration were forced to take measures to put right their balance of payments, and they imposed additional restrictions.
8.30 p.m.
At the same time, the United States became concerned about the value-added tax which the E.E.C. countries were about to introduce, and its export rebate element. Pressure was undoubtedly put on those countries not to go ahead with an export rebate and it was said that the United States might introduce some export rebate itself to correct the position which would arise. At that moment, I believe, there were indications that the British Government would take powers to reimpose the rebate by Order and it looked to me as though the Government were ganging up with the E.E.C. to ensure that the United States did not get its way with the Six. My understanding of this may be wrong—I speak completely off the cuff—but it smacks to me of an obnoxious way of handling matters. I cannot think why the Government should abolish this rebate and take these strange powers to reimpose it by Order.
A process of disintegration is going on throughout the world, with the United States forced to contract and impose restrictions. This is becoming increasingly dangerous and the type of Order suggested—which looks like a threat to other countries, particularly to the United States, although I hope that we may hear that this is not the case—implies that we will be with the E.E.C. countries and against the United States on this dispute which has arisen.

Mr. Darling: The hon. Member for Barkston Ash (Mr. Alison) put forward a well-argued case against our proposal, but I remember debates in which we both took part in which complaints were made by hon. Members opposite about the lack of flexibility in Government legislation. It is generally admitted that doing something worth while creates unexpected difficulties, but he has in Committee criticised our legislation as too rigid and not flexible enough. We are here simply asking for powers to deal sensibly, flexibly and selectively with any difficulties in future in this respect and, inconsistently, the hon. Member is now castigating me. It is terribly unfair.
The Amendments would deny the Treasury the power, in reintroducing the rebate by Order, to select the countries to which eligible exports would be sent. The power to reintroduce the rebate by Order could then be invoked only for all exports eligible under Section 7 of the Finance Act, 1964. There is a slight addition to this in the Finance Act of 1966, which makes an exemption for exports to certain E.F.T.A. countries. Leaving that on one side, however, that would be its effect.
The provision for specifying countries of destination is discretionary and not mandatory, and is intended to give the maximum flexibility in catering for unforeseeable circumstances. Both hon. Members went beyond the Amendments—I do not criticise them for this—and attacked the whole idea of our taking powers to reintroduce the rebate.
That issue was disposed of on Second Reading, but some concern was expressed then by hon. Members who wanted to know whether the selective reintroduction of rebate would be contrary to the "most favoured nation" provision of the General Agreement. Whether or not selective application of rebate would be held contrary to G.A.T.T. must depend on the prevailing circumstances. The General Agreement does not prohibit selective defensive or retaliatory measures, like anti-dumping duties, nor would the restoration of rebates, selectively or otherwise, necessarily be the most appropriate measure in response, say, to the introduction of a rebate by another country.
I am strongly advised that to take power to reintroduce rebates selectively

could not be contrary to the General Agreement. The Financial Secretary made it clear on Second Reading that the Government, in seeking such power, have no intention of breaching their G.A.T.T. obligations. The Government have made it clear that the rebate would not be reintroduced automatically but would have to be subject to very special consideration in the event of moves in that direction by other countries.
The mere assumption of powers to restore the export rebate on the basis which we suggest in the Bill could not be a breach of the General Agreement, but the question must be faced whether the exercise of the powers on a discriminatory basis could be reconciled with the "most favoured nation" requirement. Our view is that it could be so reconciled, but a definitive judgment on this point would have to rest ultimately with the contracting parties to the General Agreement.
Article I.1 of the General Agreement reads:
With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges. and with respect to all rules and formalities in connection with importation and exportation…
I do not wish to quote the rest as it gets complicated. But surely rebates could not properly be described as customs duties or charges in connection with importation or exportation. The issue, if any issue arises, would therefore fall within the phrase "rules and formalities". We would claim that they were neither, being in the nature of a discretionary privilege available to exporters on application but not something they were required to accept. We could not be certain that this interpretation would be accepted in any G.A.T.T. consideration of the question.
It may be noted, however, that the G.A.T.T. in resolving disputes traditionally adopts a common-sense and non-doctrinaire attitude, concerning itself less with the rights and wrongs and much more with finding equitable solutions. It is unlikely, therefore, that a measure of the kind proposed would attract the kind of outright condemnation which the hon. Member for Barkston Ash was sure it


would if it were introduced in the circumstances of a reaction to a measure by some other country which was itself doubtfully in accordance with the General Agreement.
The Financial Secretary made clear in the debate on Second Reading that the Government had no intention of breaching their obligations under the G.A.T.T. in taking the present powers for selective reintroduction of rebate. That power is in any case only permissive under subsection (2).

Because we take this view, I hope that the Amendments will not be pressed. Clause 3 is a purely precautionary measure in which we think it prudent to provide for ourselves maximum flexibility against the unpredictable events of the future.

Question put, That the Amendment be made:—

The Committee divided: Ayes 116, Noes 175.

Division No. 59.]
AYES
[8.40 p.m.


Alison, Michael (Barkston Ash)
Heald, Rt. Hn. Sir Lionel
Osborn, John (Hallam)


Allason, James (Hemel Hempstead)
Higgins, Terence L.
Osbome, Sir Cyril (Louth)


Astor, John
Hiley, Joseph
Peel, John


Awdry, Daniel
Hill, J. E. B.
Percival, Ian


Baker, W. H. K.
Holland, Philip
Pike, Miss Mervyn


Balniel, Lord
Hordern, Peter
Pink, R. Bormer


Barber, Rt. Hn. Anthony
Howell, David (Guildford)
Pounder, Rafton


Beamish, Col. Sir Tufton
Hunt, John
Powell, Rt. Hn. J. Enoch


Biffen, John
Hutchison, Michael Clark
Prior, J. M. L.


Biggs-Davison, John
Iremonger, T. L.
Pym, Francis


Bossom, Sir Clive
Johnston, Russell (Inverness)
Ranwden, Rt. Hn. James


Boyd-Carpenter, Rt. Hn. John
Kaberry, Sir Donald
Renton, Rt. Hn. Sir David


Brown, Sir Edward (Bath)
King, Evelyn (Dorset, S.)
Rossi, Hugh (Hornsey)


Bruce-Gardyne, J.
Kitson, Timothy
Russell, Sir Ronald


Bryan, Paul
Legge-Bourke, Sir Harry
Scott, Nicholas


Burden, F. A.
Lewis, Kenneth (Rutland)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Carlisle, Mark
Loveys, W. H.
Silvester, Frederick


Chichester-Clark, R.
Lubbock, Eric
Sinclair, Sir George


Corfield, F. V.
McAdden, Sir Stephen
Steel, David (Roxburgh)


Certain, A. P.
Mackenzie, Alasdair(Ross&amp;Crom'ty)
Stoddart-Scott, Col. Sir M. (Ripon)


Davidson, James(Aberdeenshire, W.)
Maclean, Sir Fitzroy
Taylor, Sir Charles (Eastbourne)


d'Avigdor-Goldsmid, Sir Henry
Macleod, Rt. Hn. Lain
Taylor,Edward M.(G'gow,Cathcart)


Dean, Paul (Somerset, N.)
McMaster, Stanley
Taylor, Frank (Moss Side)


Deedes, Rt Hn. W. F. (Ashford)
Maddan, Martin
Temple, John M.


Dodds-Parker, Douglas
Maginnis, John E.
Thatcher, Mrs. Margaret


Elliot, Capt. Walter (Carshalton)
Mawby, Ray
Turton, Rt. Hn. R. H.


Elliott,R.W.(N'c'tle-upon-Tyne,N.)
Maxwell-Hyslop, R. J.
van Straubenzee, W. R.


Fair, John
Milts, Peter (Torrington)
Walker-Smith, Rt. Hn. Sir Derek


Fisher, Nigel
Miscampbell, Norman
Walters, Dennis


Fortescue, Tim
Mitchell, David (Basingstoke)
Ward, Dame Irene


Foster, Sir John
Monro, Hector
Webster, David


Clover, Sir Douglas
Montgomery, Fergus
Wills, Sir Gerald (Bridgwater)


Glyn, Sir Richard
More, Jasper
Wilson, Geoffrey (Truro)


Gower, Raymond
Morrison, Charles (Devizes)
Woodnutt, Mark


Grant, Anthony
Mott-Radclyffe, Sir Charles
Worsley, Marcus


Harris, Frederic (Croydon, N.W.)
Munro-Lucas-Tooth, Sir Hugh
Wylie, N. R.


Harris, Reader (Heston)
Murton, Oscar



Harrison, Brian (Maldon)
Noble, Rt. Hn. Michael
TELLERS FOR THE AYES:


Harrison, Col. Sir Harwood (Eye)
Nott, John
Mr. Bernard Weattierill and


Hastings, Stephen
Onslow, Cranley
Mr. Humphrey Atkins.




NOES


Albu, Austen
Buchan, Norman
Dewar, Donald


Allaun, Frank (Salford, E.)
Buchanan, Richard (G'gow, Sp'burn)
Diamond, Rt. Hn. John


Alldritt, Walter
Butler, Herbert (Hackney, C.)
Dickens, James


Armstrong, Ernest
Butler, Mrs. Joyce (Wood Green)
Dobson, Ray


Atkins, Ronald (Preston, N.)
Carmichael, Neil
Doig, Peter


Bagier, Gordon A. T.
Carter-Jones, Lewis
Dunnett, Jack


Barnett, Joel
Coe, Denis
Eadie, Alex


Baxter, William
Concannon, J. D.
Edwards, Robert (Bilston)


Binns, John
Conlan, Bernard
Ellis, John


Bishop, E. S.
Craddock, George (Bradford, S.)
English, Michael


Blackburn, F.
Crawshaw, Richard
Ennals, David


Booth, Albert
Crossman, Rt. Hn. Richard
Ensor, David


Boyden, James
Cullen, Mrs. Alice
Evans, Albert (Islington, S.W.)


Braddock, Mrs. E. M.
Dalyell, Tam
Faulds, Andrew


Bray, Dr. Jeremy
Darling, Rt. Hn. George
Fernyhough, E.


Brooks, Edwin
Davidson, Arthur (Accrington)
Fitch, Alan (Wigan)


Brown, Hugh D. (G'gow, Provan)
Davies, Dr. Ernest (Stretford)
Fletcher, Raymond (Ilkeston)


Brown, Bob(N'c'tle-upon-Tyne,W.)
Dell, Edmund
Fletcher, Ted (Darlington)


Brown, R. W. (Shoreditch &amp; F'bury)
Dempeey, James
Foley, Maurice




Foot, Michael (Ebbw Vale)
Lee, John (Reading)
Prentice, Rt. Hn. R. E.


Fowler, Gerry
Lewis, Ron (Carlisle)
Price, Christopher (Perry Barr)


Fraser, John (Norwood)
Lomas, Kenneth
Price, Thomas (Westhoughton)


Gaipem, Sir Myer
Loughlin, Charles
Price, William (Rugby)


Ginsburg, David
Luard, Evan
Reynolds, G. W.


Gourlay, Harry
Lyons, Edward (Bradford, E.)
Rhodes, Geoffrey


Gray, Dr. Hugh (Yarmouth)
McBride, Neil
Robinson, W. 0. J. (Walth'stow, E.)


Gregory, Arnold
MacColl, James
Rose, Paul


Grey, Charles (Durham)
McGuire, Michael
Ross, Rt. Hn. William


Griffiths, David (Rother Valley)
Mackenzie, Gregor (Rutherglen)
Shaw, Arnold (llford, S.)


Griffiths, Will (Exchange)
Maclennan, Robert
Sheldon, Robert


Hamilton, James (Bothwell)
MacPherson, Malcolm
Silkin, Hn. S. C. (Dulwich)


Hamling, William
Mahon, Peter (Preston, S.)
Silverman, Julius (Aston)


Harper, Joseph
Mallalieu,J.P.W.(Hucddersfield,E.)
Slater, Joseph


Harrison, Walter (Wakefield)
Manuel, Archie
Spriggs, Leslie


Haseldine, Norman
Mapp, Charles
Swain, Thomas


Hazell, Bert
Marks, Kenneth
Swingler, Stephen


Heffer, Eric S.
Mason, Roy
Symonds, J. B.


Henig, Stanley
Maxwell, Robert
Urwin, T. W.


Herbison, Rt. Hn. Margaret
Millan, Bruce
Varley, Eric G.


Homer, John
Mitchell, R. C. (S'th'plon, Test)
Wainwright, Edwin (Dearne Valley)


Howarth, Robert (Bolton, E.)
Molloy, William
Walker, Harold (Doncaster)


Howell, Denis (Small Heath)
Morgan, Elystan (Cardiganshire)
Wallace, George


Hoy, James
Morris, Charles R. (Openshaw)
Watkins, Tudor (Brecon &amp; Radnor)


Hughes, Emrys (Ayrshire, S.)
Moyle, Roland
Wellbeloved, James


Hughes, Hector (Aberdeen, N.)
Murray, Albert
Whitaker, Ben


Hughes, Roy (Newport)
Noel-Baker, Rt.Hn.Philip(Derby,S.)
White, Mrs. Eirene


Hunter, Adam
Oakes, Gordon
Whittock, William


Hynd, John
Ogden, Eric
Wilkins, W. A.


Irvine, Sir Arthur
O'Malley, Brian
Willey, Rt. Hn. Frederick


Jackson, Colin (B'h'se &amp; Spenb'gh)
Orbach, Maurice
Williams, Mrs. Shirley (Hitchin)


Jackson, Peter M. (High Peak)
Oswald, Thomas
Williams, W. T. (Warrington)


Jenkins, Hugh (Putney)
Owen, Dr. David (Plymouth, S'tn)
Willis, George (Edinburgh, E.)


Johnson, James (K'ston-on-Hull, w.)
Page, Derek (King's Lynn)
Wilson, William (Coventry, s.)


Jones, Dan (Burnley)
Panned, Rt. Hn. Charles
Woodburn, Rt. Hn. A.


Jones, Rt.Hn.Sir Elwyn(W.Ham,S.)
Park, Trevor
Woof, Robert


Jones, T. Alec (Rhondda, West)
Parker, John (Dagenham)



Judd, Frank
Pearson, Arthur (Pontypridd)
TELLERS FOR THE NOES:


Kelley, Richard
Pentland, Norman
Mr. John McCann and


Lawson, George
Perry, Ernest G. (Battersea, S.)
Mr. loan L. Evans.


Lee, Rt. Hn. Frederick (Newton)
Perry, George H. (Nottingham, S.)

Clause ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.

Schedule.

(EXPORT REBATES: SUPPLEMENTAL.)

Amendments made: No. 22, in page 5, line 22, leave out paragraphs (b) and (c) and insert:

(b) that the contract satisfies the conditions in sub-paragraph (2) or as the case may be sub-paragraph (3) below.

No. 23, in line 29, at end insert:

(2) Where the consideration payable for the hiring is expressed in sterling, the said conditions are that there is no provision for the alteration of the terms of the contract on a change in the exchange rate of sterling with any other currency or medium of exchange, or on the withdrawal of export rebates, and—

(a) either that the consideration is payable in sterling, or
(b) where the consideration is not payable in sterling, that there is no provision for the conversion of the expressed sterling amount into the currency in which the consideration is payable to be at a rate of exchange which was the rate prevailing at some time before 19th November 1967.

(3) Where the consideration payable for the hiring is not expressed in sterling, the said conditions are—

(a) either that the consideration is payable in sterling and the contract provided for the conversion of the expressed amount into sterling at a rate of exchange which was the rate prevailing at some time before 19th November 1967, or
(b) that the consideration is not payable in sterling and the contract provided for the expressed amount to be reduced on a change in the exchange rate of sterling with the currency in which it is expressed,
and in either case that there is no provision for the alteration of the terms of the contract on the withdrawal of export rebates.—[Mr. Darling.]

Mr. Higgins: I beg to move. Amendment No. 17, in page 6. line 10, to leave out from "below" to the end of line 13.

The Chairman: With this Amendment we can also consider Amendment No. 18, in page 6, line 14, leave out subsection (2).

Mr. Higgins: The intention of this Amendment will be quite clear. It relates to paragraph 5, which deals with the right of any officer or person authorised by the Board of Trade to obtain documentation to determine whether there


should be certification—if that is the right expression—of a claim for an export rebate.
The fact that we have tabled these Amendments clearly indicates that we are of the opinion that the powers sought by the Government under the Bill are too extensive. We want to enable people to obtain an export rebate—if they are entitled to it—on a transaction that is covered by the Bill. This is common ground among hon. Members on both sides of the Committee. At the same time, however, this needs to be checked and verified by the officers of the Board of Trade or Customs and Excise, and it is not unreasonable that they should have powers to call for the appropriate documentation.
Paragraph 5(1) provides that a person claiming a rebate shall furnish
within such time as that officer or person may require, such information as may be reasonably necessary to enable the Board of Trade to determine whether a certificate should be issued in respect of that contract, or whether any certificate so issued should be cancelled under paragraph 6 below…
That is not objectionable, because the words "may reasonably be necessary" are included. But instead of stopping there, as we suggest, the Clause goes on as follows:
and to produce any books or accounts or other document of whatever nature relating to the contract, or to those goods, for inspection by that officer or person at such time and place as he may require.
That is a remarkably wide provision. We feel that it is too wide. It is reasonable to require the production of the relevant documents, but why should
any books or accounts or other document of whatever nature
relating to the transaction be revealed to the officer concerned? All that is required to be produced is the documentation that we have been discussing on the earlier Clauses, namely, such as will show that a contract of a firm sort has been entered into and that the exporter was committed irrevocably to carrying out that contract. Yet suddenly we find these provisions at the tail end of the paragraph.
I need not weary the Committee by going into the matter in greater detail. I can only assume that the Government feel that they must take these wide powers simply to cover themselves in any con

ceivable contingency—but if that is the case I hope to hear what kind of contingency the Minister has in mind.
The other Amendment is not dissimilar. Paragraph 5(2) of the Schedule reads:
Any such officer or person shall be entitled to take extracts from or make copies of any document produced to him under subparagraph (1) above.
This is surely not necessary. We feel rather doubtful whether it is required even in respect of the actual information necessary to enable the Board of Trade to determine whether a certificate should be issued or cancelled. That is a point on which we might be persuaded, but that these officers should have the power to copy and take extracts from any document of any sort with regard to a contract we think to be highly undesirable. I should have thought that the Minister of State would also think it highly undesirable and would therefore feel that these tidying up Amendments were not unreasonable and ought to be accepted.

Mr. Darling: This issue arises on most Board of Trade legislation. Although this is a financial Bill this Schedule refers to Board of Trade legislation. Several hon. Members opposite will remember that they raised this specific issue, and that we had long discussions about it—very useful discussions; I am not complaining—in Committee on the Companies Bill, and that we also debated it on the Industrial Development Bill, and so on.
The powers which we are giving to Board of Trade officials are very wide indeed. Anyone looking at them would inquire why we needed such wide powers. The difficulty arises if we accept the argument and try to define clearly and in all circumstances the limits of the information for which the Board of Trade officials should ask.
The point which worries the hon. Member for Worthing (Mr. Higgins), and which also worried some of his hon. Friends in previous legislation, concerns confidentiality. It should be all right if I could prove—as I am sure that I shall be able to prove—that we cannot limit in a Statute the area of information for which the Board of Trade should ask; and then could prove that there will be no breach of confidentiality, that the


Board of Trade inspectors or officials will ask only for the information which they will need in a particular case and that, whatever information is given, this will never, in any circumstances, be revealed to anybody else. If I can do that, I think that the fears of hon. Members will be put at rest.
When we discussed the matter in the Companies Act and in the Bill which provided for investment grants I succeeded in assuring hon. Members that all Board of Trade officials who deal with this kind of information—which goes much wider than the Bill—have the Official Secrets Act drawn to their attention and, as it were, operate under that Act. No hon. Member can give me any case in the course of investment grants or dealing with insurance companies or dealing with company law in which there has ever been any disclosure of information by the Board of Trade. The staff deserve a tribute for the fact that the way in which they operate makes it clear that in no circumstances would any confidential information ever be disclosed to anybody but the officials concerned with the case which they are investigating.
The hon. Member for Worthing was on the right track when he agreed that the Amendment would deny the Board of Trade power to require applicants for a certificate to produce books, accounts and other documents relating to the contracts which have come into question. The contracts would need to be examined by the Board of Trade to make sure that they conformed to the conditions laid down in the Bill. The Board of Trade, however, would be denied power to take extracts or copies of such documents. If the Board of Trade were denied those powers they would be unable to satisfy themselves about the terms of the contract because they would not have the information and would be denied the right to obtain it. They would therefore be unable to issue a certificate. The hon. Member himself said that unless they got the information which satisfied them that it was a valid contract and that it conformed to the terms and conditions of the Bill, they would be unable to issue a certificate.

Mr. Higgins: That is covered by the earlier phrase,

such information as may be reasonably necessary to enable the Board of Trade to determine".
If the right hon. Member wishes to go wider, then one part of the "reasonably necessary" ought to be deleted and the other part retained. He cannot have it both ways.

9.0 p.m.

Mr. Darling: No. The effect of the Amendments would be as I say.
There might be a greater risk, if the hon. Gentleman is right, of certificates being issued wrongly against an incomplete or misleading disclosure of information. We must have full information in order to decide these matters. That risk could be very real in transactions in which the relevant contracts of sale consisted of exchanges of correspondence in contrast to the formal legal documents, when the withholding of a relevant document or information might not be so noticeable.
Another important aspect of the need for this full provision, without Amendment, is that the Board of Trade also has power to cancel a certificate once issued if indications emerge that the certificate has been issued against incomplete or false information. Therefore, the Board of Trade must have power to look at the books, take copies of documents, and so on.

Mr. Nott: Will the Board of Trade have power to show any of the documents which it has taken from a company for this purpose to, say, the Inland Revenue or to another Government Department? Would that happen in any circumstances?

Mr. Darling: I am quite sure that it would not, but I will check that point before we finish this part of the debate. I am quite sure that the guarantees would apply that I gave on a similar question—asked, I think, by the hon. Gentleman—about information being given to other Government Departments. It was then the problem of the Board of Trade investigation of breaches of exchange control. I do not think that sort of thing would arise here.
I do not know to what extent I have to qualify that assurance in the same way that I had previously to qualify the assurance covering breaches of exchange


control, but unless something like that happens—and I am obviously asking for the assurance to be given to me—there is no need to show the documents to other people, because the purpose of the exercise is to satisfy the Board of Trade that the contract conforms to the conditions laid down. The power to call for documents in all the circumstances that I have tried to describe might well be absolutely essential to enable the Board of Trade to check the information on which the certificate was issued, and to call 'or further information which may have been withheld.
I am sure that the point of the Amendment lies in concern about the need for the disclosure of confidential information. I must press that point about the scope of the information required. This kind of investigation does not arise regularly, but only in cases where full information has not been given to the Board of Trade in the first place.
The Department's officials go along in a perfectly friendly and by no means objectionable manner, and say, "We have not got the full information—will you please give it to us?" If the firm says, "We have had enough of these requests to provide information for the Board of Trade," we reply that we have power to ask for the information, and from that poi it onwards it usually happens that the powers do not need to be used. There is no further pressure. I would hope that in all these cases we would have very little pressure indeed, but the fact remains that we are dealing with public funds and we must have the information. We cannot prescribe in the terms of the Bill any limitation of information for this purpose.
If that point is accepted, as I am sure it must be, what is concerning hon. Members on both sides is this disclosure of confidential information or documents—documents that may be held, for example, by third parties such as solicitors or bank managers. I can give the Committee an absolute assurance that, as in all other Measures where the Board of Trade has this kind of power to require documents to he disclosed, no information will be given to any other people unless an issue like exchange control comes up. We do not need to write anything into the Bill, because it

is our practice to follow what the Monopolies Act says:
Nothing in this section shall be taken to require any person who has acted as a counsel or solicitor for any person to disclose any privileged communication made to him in that capacity.
We never ask for that kind of information to be disclosed, or we try to avoid asking for it, and I repeat the assurance that in all the Measures the Board of Trade looks after we shall obey this rule about confidentiality that we have imposed upon ourselves.

Amendment negatived.

Schedule agreed to.

Bill reported, with Amendments; as amended, considered.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time, and passed.

NATIONAL LOANS BILL

As amended (in the Standing Committee) considered.

Clause 1.

(THE NATIONAL LOANS FUND.)

9.7 p.m.

Mr. Deputy Speaker (Sir Eric Fletcher): The first Amendment selected is Amendment No. 1, and it may be for the convenience of the House if with this Amendment we discuss the following: Amendment No. 2, in page 2, line 2, after 'Treasury', insert:
'within the provisions of a statement approved by a resolution of the Commons House of Parliament';
Amendment No. 4, in Clause 4, page 4, line 22, leave out from 'exceed' to end and insert:
'the credits on the National Loans Fund granted for this purpose by the Comptroller and Auditor General in accordance with section 1(3) above';
Amendment No. 5, in page 4, line 23, leave out subsection (2), and
Amendment No. 11, in Clause 7, page 6, line 35, at beginning insert:
'Subject to section 1(3) above'.


That can be done only if it is acceptable to the House.

Mr. R. H. Turton: I beg to move Amendment No. 1, in page 1, line 11, at end insert:
(3) For the financial year ending on 31st March 1969 and each subsequent financial year the Treasury shall prepare and lay before the Commons House of Parliament before the beginning of the financial year a statement specifying the purposes and the estimated amount for each purpose of payments to be made out of the National Loans Fund.
I agree that this Amendment and Amendments Nos. 2, 4, 5 and 11 all hang together and that it would be convenient to have one debate on them. These are important, although I hope non-controversial Amendments. When the present Home Secretary introduced his last Budget, he presented the new form of accounts rather on the lines of this Bill, and went on to say:
I have also been considering whether the time is coming to consider changes of substance…I have therefore put a review in hand."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, cc. 998–999.]
On 7th November, when he was speaking in the debate on the Address in reply to the Gracious Speech and referring to this Bill which had been mentioned in the Gracious Speech, he said:
First, it will make for greater clarity in presenting the Government's financial transactions,… Secondly, the size of the Government's borrowing and lending, not for this alone but for other bodies—local authorities, nationalised industries, and so on—is now so great in its own right and the significance of these lending transactions in relation to the Government's total borrowing requirements is so large that the issues should be dealt with separately from the revenue and expenditure transactions of the Government."—[OFFICIAL REPORT, 7th November, 1967; Vol. 753, c. 865–6.]
I feel rather like one does when in a desert seeing a mirage a long way off. It looks very large and attractive, but, as one gets nearer, it become less large and eventually it disappears. This is what I feel about the present Home Secretary's description of the Bill, because on Second Reading the Chief Secretary said that the Bill deals merely with accountancy arrangements. "Changes of substance" had disappeared. In Committee the Financial Secretary said that the Bill was only "an accountancy exercise".
What is needed is proper parliamentary control of the Government's borrowing

and lending. Just as the Commons receives each year from the Chancellor an estimate of his revenue and expenditure and approves the Estimates so, too, the House should receive each year a budget on capital account, or a budget on the National Loans Fund, which it can debate separately and approve.
It is clear from what the Financial Secretary said in Committee that it is the Chancellor's intention to present the financial statement in the new form adopted by the present Home Secretary last year. If so, it should be a separate debate on the Government's capital account and it should require the approval of the House. This is the object of the first two Amendments.
After all, this is an important matter. The net borrowing requirement has risen from£355 million in 1964–65—I agree that it may have a different meaning, because in that financial statement the old form of calculation was used—to£726 million in 1966–67 on the new definition, and it will rise to£1,115 million in 1967–68. This is a great part of our troubles. This huge borrowing requirement is not financed by genuine borrowing or saving but by the creation of new money to an extent which causes the serious inflation from which the country is now suffering.
In support of this belief, I quote words used on 18th March, 1966, at the end of his term of office, by Lord Cromer, then Governor of the Bank of England. Referring to 1964–65, when the Chancellor said that the net borrowing requirement was£355 million, Lord Cromer said this:
This surely is one of our basic problems. For the last year our money supply increased by some 7½ per cent. against our increase in the real national product of about 2 per cent.
I ask the House to study these words well:
We unfortunately have a system under which Exchequer financing can, and does, lead to the creation of money quasi-automatically to the extent that the requirements of the Exchequer are not met by general savings or taxation".
The first two Amendments seek to give the House proper control over and information about the Government's capital account. I understand from what was said in the Committee and by the Chief Secretary on Second Reading that the House will have the information in the new form, but it has not, as the Bill


is drafted, proper control. Amendment No. 2, therefore, would provide that, before the Comptroller and Auditor General approves grants under the subsection, he will be restricted to those grants which have been approved by the House, in other words, to the capital budget statement made by the Chancellor which will have to be approved by the House.
9.15 p.m.
Amendment No. 4 deals with local loans, probably the least satisfactory part of our financing and the part where there should be far more effective Parliamentary control than there is at present. Under the Bill as drafted, not only is there no improvement in Parliamentary control but the present Parliamentary control is reduced. There would be less opportunity for the Commons to scrutinise the capital expenditure involved in local loans. At present, we have an annual review of local authority lending when the Public Works Loans Bills are brought before the House each year. Under this Bill, however, there will be no opportunity for the House to review local loans annually. The only opportunity the House will have under Clause 4 will come when the limit of£1,000 million in the local loans part of the National Loans Fund has been exhausted and the Chancellor has to bring forward not a Bill but a Statutory Instrument to make further provision for local loans.
There are, therefore, two points here. As the limit of£1,000 million is taken, and the present expenditure on local loans is somewhere in the region of£600 million a year, there are likely to be intervals of 18 months to two years between the time; when the House has an opportunity to look at lending for local authorities. Second, it will not be by a Bill. Although it is unusual to amend or seek to amend a Public Works Loans Bill, it has a stage at which we may take that course if we wish to do so. But it will not now be by a Bill with three stages; it will be merely a Statutory Instrument requiring an affirmative Resolution, without amendment. Motions for an affirmative Resolution are apt to be taken not at what. I hope, is regarded as a normal hour of business but very late at night. Therefore, Parliamentary control over local loans as provided for in the Bill is

worse than it is at present and is far from satisfactory.
Amendments Nos. 4 and 5, therefore, would insert into the subsection a provision that local lending would be included in the statement of the National Loans Fund, so that the House would each year have an opportunity to examine, criticise and approve that amount of the Chancellor's capital account which dealt with loans to local authorities. That would give proper Parliamentary control over local lending.
Amendment No. 11 is merely consequential. Under Clause 7(1) which deals with the issues to the Exchange Equalisation Account, there is no limit to the Treasury's discretion in giving directions. In the Amendment we tie this to the approval of the House given in the new subsection (3) to Clause 1 which forms the first Amendment.
In the group of Amendments we propose to see that control over borrowing and lending requirements is restored to the House. That is especially important at present because under paragraph 10 of the Letter of Intent the Government have given an undertaking on behalf of the House that they will have firm control over the capital account. They have also given an undertaking that their net borrowing requirement will be limited to£1,000 million. Therefore, the House would be failing in its duty if it did not insert into the Bill some way in which it can scrutinise and approve the Government's provisions for lending.
I do not believe this to be a party issue. It is something much more important and wider. In a booklet entitled "A Programme for National Recovery—Research Paper No. 1", published about a fortnight ago, the economists concerned examined what Parliament and the country have been doing in the past six years, covering not only the period in office of the present Government but of the Conservative Government. They found that over the six years from 1961 to 1966 central Government expenditure exceeded income by a net total of£1,840 million, and that of that net deficit there was a£756 million increase in the issue of notes and coins, of which£570 million was added to the currency in circulation with the public, which was thus expanded by 26·1 per cent. over the six years at


an average annual rate of 3·9 per cent. Over the same period, net deposits by United Kingdom residents with the United Kingdom banking sector increased at an average rate of 5·1 per cent. The combined effect was to increase the total money supply—by the Bank of England's definition—at a rate of 4·7 per cent., when the gross national product at constant prices was increasing at the rate of only 2·9 per cent. It really examines what is wrong with the country and why prices in the shops go up.
It is not the wage-cost inflation that we are all talking about. It is this inflation of money supplies which is created largely by Government lending. It is the capital account about which at present the House of Commons hears so little and over which under the Bill it will have so little control.
Taking those six years, 1961–66, one finds that there was a surplus between income and expenditure of£3,813 million, but the long-term loans amounted to£5,653 million, giving the deficit figure that I mentioned of£1,840 million. This is why I attach importance to the question of Parliamentary control of the capital account and why I ask the Government to reconsider the parts of the Bill which I am seeking to amend and insert in them proper control by the House of Government lending both to public corporations and to local authorities.

Sir Henry d'Avigdor-Goldsmid: I intervene briefly to support the Amendments put forward by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). Having lived a long Parliamentary time with the Bill, I realise that it is, as the Financial Secretary described it, an accountancy Measure, and that, much as we should like to get into the Bill the sort of reforms that my right hon. Friend has so eloquently expounded, this is not a Measure that will hold them.
However, as it is a Measure of clarification and a matter of accountancy, I still think that on the accountancy side it does not do as good or clear a job as it could do. We had long discussions in Committee about the role played by the Exchange Equalisation Account in dis

torting the figure of the next borrowing requirements. I hark back to this because the net borrowing requirements now figure in a State document, the Statement of Intent appearing in columns 649–50 of the OFFICIAL REPORT of 30th November last.
This Letter of Intent to Mr. Pierre-Paul Schweitzer laid great stress on the net borrowing requirement. However, as we expounded in Committee, and as I think the Financial Secretary learnt and accepted, the intervention of the movement of the Exchange Equalisation Account into the calculation of the net borrowing requirement has a distorting and not a clarifying effect that is to say, when there is too much sterling capital at the disposal of the Exchange Equalisation Account, as a result of the need for the Exchange Equalisation Account to support sterling in the markets it makes a repayment and thereby reduces the net borrowing requirement.
I know that this year all will be well. I am sure that many of us, including the Chief Secretary, read in the Financial Times of 16th February about the advent of the I.M.F. team who are to breathe down the Chancellor's neck to study all the figures which are to be put into his Budget. I should like to quote from the very interesting article in the Financial Times, which has not been contradicted:
…the I.M.F. team will produce a list item by item of the promises made in the Letter of Intent and accompanying private documents "—
We did not hear much about them—
and assess quantitatively as well as qualitatively how each is being carried out.
I do not think that anyone on this side of the House would think that there could be a more satisfactory scrutiny of the Chancellor's intentions and the documents than is liable to be produced by this team of experts, and I am certain that, if we are to have the same sort of inquiry every year, there is no need to amend the Bill. But God forbid that we should be in the position every year of having to have Mr. Good and his experts going through our Budget item by item, scrutinising the promises made in the Letter of Intent and assessing quantitatively and qualitatively how each is being carried out.
9.30 p.m.
This is a frightening prospect, and I do not envy the Chancellor and his colleagues in the Treasury what this examination brings, but, regardless of which side of the House we sit, we all hope that this will be a once for all occasion—that, after this year, we shall be able to satisfy our creditors that we are keeping our promises. If, as I hope, Mr. Good and his team do not function in the same spirit after 1968, we need the sort of book-keeping suggested in this group of Amendments and we particularly need to get the movements on the Exchange Equalisation Fund out of the net borrowing requirements.
My right hon. Friend quoted a document of the National Recovery Programme, and I want to quote a sentence which puts in clear language what I have been trying to say:
The large haphazard flows of sterling in arid out of the Exchequer, which now arise automatically out of official borrowing overseas and the working of the Exchange Equalisation Account, must be dealt with separately from the Government's borrowing and lending.
These are unexceptionable sentiments. We all agree with them. I am sure that the right hon. Gentleman agrees with them. But these movements figured in the calculations of the net borrowing requirements and I know that Mr. Schweitzer and his team have not been taken in by them. These men who are breathing down the Chancellor's neck ate too intelligent for that.
But I put it to the right hon. Gentleman, who has great knowledge of accountancy, that this is not satisfactory in accountancy terms and should be remedied by keeping the Exchange Equalisation Account separate from the net borrowing requirement. In view of that I ask him to accept the Amendments. I hope the right hon. Gentleman will acquit me of discourtesy if I do not hear the end of this debate, since I will have to leave, but I would point out that in Parliamentary terms, I have spent more time than he has on this Measure, although not more time generally, of course.

Mr. Michael Shaw: I should like wholeheartedly to support my right hon. Friend the

Member for Thirsk and Malton (Mr. Turton). I was very interested in his exposition. I confess that my emphasis on the Amendments, particularly on the first two, is rather different from his. The important feature of the Amendments is that concerned with supplying additional clear-cut information to the House and the country.
I do not believe that we should in any way curtail Government decisions, except that the knowledge on which their decisions are likely to be based should be made public. The decision must remain with the Government. The detailed statement which the Amendments would provide for being brought before the House each year to specify the purpose and estimated amount of each payment out of the National Loans Fund would give a much better appreciation of the financial picture at the beginning of the year of how much was to be spent throughout the year.
The present difficulty is that the amounts to be spent are largely to be spent out of sums already authorised—because every payment out of the National Loans Fund has to be authorised by the House at some time or other. The difficulty is that these authorisations are not given when each detailed amount of expenditure arises, but by authorising limits. So long as those limits are not reached, it is entirely for the Government to decide to make payments out of the Fund as and when they think fit. Those limits are now so large that in any one year the total amount of discretion which the Government have in total payments is very considerable.
If the Amendments go through, there will be nothing to stop the Government, if they find that they have to pay more than is set out in the original statement, from bringing a further statement before the House during the year. There is no objection to that, because the Government will have to make a clear statement of the purpose and the amount of the money involved.
When we were discussing the Companies Act, we had long debates about the virtues of complete disclosure. There were long speeches about the evils of hiding information from the public, from the shareholders and from the work-people. If this argument is true, as I


believe it largely to be, many of the arguments used about the disclosure in private industry could be applied to the public sector far more than has been acknowledged.
If this expert team is to come to this country to look over the shoulder of the Chancellor of the Exchequer at all the secret facts and figures, those facts and figures, or at least their general import, will be known in full measure throughout the knowledgeable world, and I see no reason why they should not be known to the British public. Everything is to be gained. After all, one thing that no one believes nowadays is the monthly figures about our cash position, because in many months they are obviously cooked. If we are to restore meaning to them, people's confidence must be restored through knowing that they are correct.
Our position is like that of the family with a bathroom. When there is a good supply of hot water, one does not worry about how much one uses and the whole family has a good bath, but if the plumbing is suspect, one does not worry about getting as much as necessary, but takes care to judge how many people want a bath and how much hot water there is in the system. Exactly the same is true of the amount which we should spend on the ventures which would be listed in such a statement. It is not a question only of those who need it but of how much money is available. Both ends must be considered. Unless we know the facts, we cannot properly appreciate the situation, and cannot, as we should, provide a proper check on the Government, whatever their complexion.

Mr. J. Bruce-Gardyne: support the Amendment for two reasons, the first in the international context. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) drew attention to the report in the Financial Times on Friday of the examination to which the Chancellor will be subjected by the team from the I.M.F. later this week and rightly said that we hope that this procedure will not be necessary in future. But this makes it all the more important that Parliament should be better-informed, as these Amendments suggest, of how the Government see the requirements of the

National Loans Fund over the coming year.
My hon. Friend also referred to the operations of the Exchange Equalisation Account and I hope that the Chief Secretary will say something on this. I have studied what the Financial Secretary said in Committee and I find it a little worrying. He said:
The I.M.F. is perfectly well aware of the meaning of ' borrowing requirement' which broadly follows the meaning which the hon. Gentleman wants to put upon it.…The I.M.F. is certainly not naive on these matters, and is perfectly well aware that the Government can sometimes have flows of money from the E.E.A., which, of course, would appear, if not taken into account, to reduce the borrowing requirement below what it really is."—[OFFICIAL REPORT. Standing Committee E. 30th January. 1968; c. 134.]
He also said that Mr. Schweitzer cannot have the wool pulled over his eyes. We would accept this, but, in the other years, when the Chancellor, as we hope, is not subjected to this sort of scrutiny, we in this House do not want the wool pulled over our eyes as it can and has been by the operations of the Exchange Equalisation Account. Therefore, the first point is that which my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) made—the question of accountability to Parliament. If this information this year must he given to the I.M.F. team, surely in future years it should be given to Parliament so that we can effectively debate these matters in a way which we have not been able to do in the past.
9.45 p.m.
The second point is an external point. When I was in Bonn last week, one of the German officials to whom I was speaking said, "Suppose that the scheme for special drawing rights were activated and that under the scheme the British Government were entitled to draw 5 million dollars worth. How do we know that the British Government would not use this credit facility to finance their own deficit spending at home, as they did last year?" This is a very ominous question. The implications behind it are that the activation of a scheme like the S.D.R. scheme, which may be attractive for general purposes, may be postponed or delayed precisely because a foreign Government does not have confidence in the bookkeeping


operations of the British Government. That is what it comes to.
This is another strong argument in favour of the Amendment. This year, we have the I.M.F. team to do the Chancellor's homework for him—to breathe down his neck, as has been said—and to keep him in order. My goodness, it will be needed. But it seems reasonable that in future years the House should be given information of a similar nature so that vie can conduct our debates in knowledge of the facts and so that Governments abroad do not have the qualms which evidently they have about the bookkeeping of the Government.
I hope that the Chief Secretary will look with a kindly eye on the Amendments and, above all, on the thinking behind them.

Mr. Terence L. Higgins: It is with some diffidence that I support my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), who proposed the Amendment in a manner truly worthy of the Father of the House. It is absolutely right, however, that we should emphasise the very great importance of Parliamentary control over the country's financial affairs.
Many of my hon. Friends have pointed out that it is very unsatisfactory when we know, and indeed it is widely publicised, that the I.M.F. is looking into international accounts and examining them in detail and the House of Commons does not have the same information laid before it.
May I quote again from an article in the Economist which I had occasion to quote in another context in Committee. The traditional case for Parliamentary control of the country's finances has been 'frequently set down in its columns. The article states:
Down the 700 years of British Parliamentary history one of the main purposes of 'having a Parliament has been so that the people should be given a clear bill of why authority is imposing taxes upon them.
I do not think that the House should have 'any doubt that the question of the extent of Government loans is every bit as much an imposition of taxes on the people as a:-e direct or indirect taxes, because if the lending and borrowing of the Government are not subject to Parliamentary scrutiny it is very likely that we shall

find ourselves in an inflationary situation which in turn imposes effectively tax on the wealth of the country.
Therefore, these Amendments are very important. They raise broader questions concerning the quantity theory of money, but my right hon. Friend was right to quote this in support of his case. While it is true that over a period it has become unfashionable with economists, in a series of articles and other studies which have spelt out the assumptions on which the quantity theory of money has been based economists have, on the whole, come very much to the theory that there was rather greater validity in it than was thought five or 10 years ago, although it requires considerable qualifications in a number of respects. None the less, the essence of the theory is undoubtedly right and it is right that my right hon. Friend should have brought it into the argument in favour of his case.
Throughout the debates on this interesting Bill, we have emphasised the greater need for forecasting in an economic context but we have also emphasised the need for forward estimates. I always have the greatest trouble in carrying the Chief Secretary with me in economic forecasts, and it would be out of order to probe the matter now, but I would say that it was common ground between us that there is a strong case for the Government, in presenting their accounts for the year, to present forward estimates, at least on an accountancy basis, of what they intend to do concerning expenditure and income. If that is so. it is surely wrong that expenditure which is to be financed out of borrowing should not have similar forward estimates.
We were repeatedly told by the Financial Secretary in Committee that we should in future have as much information in the accounts and estimates presented at Budget time as we had had in the past. With particular regard to Amendment No. 1, however, it is important that we should have an estimate of the Government's likely borrowing requirements and a breakdown of what they expect the composition to be.
On that there should be common ground between us. Given the general expectations which have been aroused in recent months that the Government would in


future be more forthcoming on their economic analysis, I hope that we might have a sympathetic statement from the Chief Secretary with regard to the forward estimates of borrowing requirements.
Surely, if it is possible to put a figure in a letter of intent to the I.M.F., it is also possible to give a reasonable breakdown of how the figure has been arrived at. Unless this is done, clearly the figure is extremely suspect. In the debates on the Bill, we have probed consistently to see just how suspect it is. We were absolutely right a few moments ago to point out the crucial rôle played by the Exchange Equalisation Account in fudging. if that is the right expression, the analysis of the borrowing requirement. We hope that the Government will be more explicit about this in the future on the lines suggested by my hon. Friends.
Amendment No. 2 seeks to impose on top of the forward estimates the specific consideration that
the provisions of a statement
should be
approved by a resolution of the Commons House of Parliament".
This is an important Amendment. It may be that the Government would not feel able to make a specific estimate but would rather wish to give limits beyond which they would not go without applying again for further Parliamentary approval. That should be a good way of carrying out my right hon. Friend's intention that at the beginning of the year the Government should make estimates.
In order not to impose too rigorous a degree of exactitude upon the figures and to cover the likelihood of margins of error around those figures, the Government might give the figure which they expect to see in the forthcoming year and a margin above it, but anything in excess of that limit should require further Parliamentary approval. In that event, we would have a far better system of Parliamentary control than we have now.
It is very dangerous that Parliament's role in this matter, particularly with regard to the financing of borrowing and lending, should have declined to the extent that it has. The House will be grateful to my right hon. Friend for his set of Amendments.

The Chief Secretary to the Treasury (Mr. John Diamond): We are grateful to the right hon. Member for Thirsk and Malton (Mr. Turton) for drawing attention to these matters. I am particularly grateful because there is nothing I enjoy doing more than removing misapprehensions and misconceptions, and I hope to demonstrate to the right hon. Gentleman that his Amendments, which he has explained so clearly and so well, do not achieve the purpose he has in mind, are unnecessary to achieve the purpose he has in mind in so far as that can be achieved, generally, therefore, would not bring any benefit to us and, in particular, are of such closely controlled and limited a character as to be incapable of being acted upon. If I am able to satisfy the right hon. Gentleman and the House of all those propositions I dare say that the right hon. Gentleman will not wish to press his Amendment to a Division, so I shall seek to direct my remarks straightaway to those propositions.
First of all, he started by referring to the Second Reading debate and the comments I then made about this being an accountancy exercise, which was not quite a mirage but was a small pool left after the original wide and attractive oasis which the Chancellor described. I hope I satisfied the right hon. Gentleman in my Second Reading speech that we had examined all the concrete and substantial proposals which might properly have been examined. We did examine them very carefully, and came to the conclusion that what was left of them was something less than we had contemplated as possible to us, but nevertheless of benefit, although meriting the description of being only an accountancy exercise. It is difficult, in terms of an accountancy exercise of this kind, to carry out the kind of monetary policy control which the right hon. Gentleman had in mind.
He is anxious about the amount of additional money supply, and in this he is supported by his own Front Bench in the person of the hon. Member for Worthing (Mr. Higgins). Let me clear one misconception of fact while we are on that point. The right hon. Gentleman referred to the increase in money supply between 1960 and 1966. I have fortunately been supplied with figures which show that there had been lending to the private sector during that period by the


banks of£3,700 million, and lending to the Government was minus£520 million, so that the net figure of approximately£3,200 million represented lending to the private sector and repayment by the Government of£520 million. I thought I ought just to mention those figures lest the right hon. Gentleman thought that, owing to some lack of Parliamentary control, excessive amounts of money supply had got into the system.
Now let me come to the essential proposal which the right hon. Gentleman makes for Parliamentary control, and let me try to repeat what I said on Second Reading, but referring it more precisely to the Amendment, as to the lack of need for what the right hon. Gentleman is proposing.
It is the case that all the receipts into the National Loans Fund are defined by stature. It is the case that all payments out of the National Loans Fund are authorised by this House, and, with one exception, authorised up to the limits—I will deal with that one exception later because the right hon. Gentleman, with his usual skill, put his finger on the one exception. If we have Parliamentary authority for everything corning in and Parliamentary authority for everything going out, then Parliament, it ought to be clear, must be in control of the difference. That is a simple proposition of logic. The hon. Member for Scarborough and Whitby (Mr. Michael Shaw) is shaking his head in a negative fashion, saying that, though there is Parliamentary control over a period of years, Parliament does not necessarily have control each year as to the precise amount.
10.0 p.m.
I accept that. There is no major difference between us about it. I shall seek to explain the position and hope to demonstrate that we are doing everything on the lines suggested by the mover of the Amendment. I repeat that the right hon. Gentleman and his hon. Friend the Member for Scarborough and Whitby drew attention to the fact that although what I am saying is absolutely right in respect of a period of years it is riot necessarily right in respect of each individual year. They seek to improve the situation—not to create a new one—by delimiting and defining it in respect of annual control. What occurs to the

right hon. Gentleman is an annual control similar to that on Estimates.
I will tell the right hon. Gentleman why that would not work. First, the control of Estimates is needed, because for most items for which Supply expenditure is incurred this is the only authority—the Estimates and the approval of the Estimates by this House—whereas expenditure out of the National Loans Fund has already been authorised by the various Statutes under which the loans were permitted. That is a major difference
There is another major difference, in the sense that whereas Supply expenditure is normally recurring expenditure, going on from month to month, week to week and often from day to day, payments out of the National Loans Fund are anything but recurring expenditure. They are made from time to time at irregular intervals, as they must be. They are therefore not susceptible to the same kind of treatment
The kind of control suggested by the hon. Member for Scarborough and Whitby is impossible to accept because it would not permit of a variation in the way that a Supplementary Estimate provides. Perhaps that is a matter of drafting and it is intended that it should permit it; I mention it only in passing. The real point is that with the best will in the world we cannot estimate in this irregular field with the necessary degree of accuracy that we can in respect of Supply expenditure, so as to permit of the Government's being bound as they are by Supply expenditure
It is not a question of not informing the House. The House can and does have every kind of information. It is a question of accepting, as we do under the Estimates procedure, a binding authority which limits us and makes it necessary to come to the House for a further amount or a variation in it. We cannot forecast with that accuracy. It may be said, "But surely you can forecast to some extent—even to the extent that you are not willing to be bound and even having regard to the fact that this expenditure arises intermittently and irregularly."
The answer is, "Yes, certainly we can." That is why, each year, there is published—and there will continue to be


published—at Budget time a complete list of what have hitherto been called loans from the Consolidated Fund and what will in future be called loans from the National Loans Fund. It is a complete and detailed list. I have the 196768 list—Cmnd. 2343—running to 21 pages. It gives all the details of every kind of loan from the Consolidated Fund. It gives summaries, details, the past situation, the aggregation of loans made, the description of the amount authorised to be drawn and the amount remaining within that authority
That is the way in which the information should be presented to the House. It is made available at the time of the Budget because it is closely linked with the Budget, as the right hon. Gentleman knows. That is the way the information can be given, is given and has been given, and it is the way in which it will continue to be given. It has been given for some years. It was started by a Conservative Government, I believe, in the early 1960s, and it has been continued every year since. We shall continue to give it and it will be tied up with the new provisions
I suggest to the right hon. Gentleman that the information which can reasonably be required is there but that we cannot go further and tie ourselves, in the binding way in which an Estimate requires us to be tied, because it is not humanly possible to estimate with the same degree of accuracy over one year expenditure which by its nature is intermittent and irregular as is possible with Supply expenditure which, by its nature, is regular and occurring from day to day or month to month.

Mr. Turton: I accept that, but what we do not get at the moment is a separate debate on capital account, with a separate Resolution on it. That is the defect of the present system. It may well be that it could be done by altering the procedure of the House. It is important that the House should be acquainted with what is the capital account, should debate it and, I believe, approve it.

Mr. Diamond: The right hon. Gentleman is always careful in his choice of words. He said, "What we do not get at the moment". He is. therefore, drawing attention to what in his view is a con

tinuing defect. He is not suggesting that this new accountancy exercise is producing a different situation in respect of control by the House. It is not. It is adding to the information before the House. But I agree with him at once that it is not producing a new situation.
Perhaps the best way of debating this is in the Budget debate. That will be made the more intelligible in future because of the full information available and because the division between the Consolidated Fund and the National Loan Fund will be before the House and, therefore, each right hon. and hon. Member will be able to be more informed in his speeches. But the information is there, and the matter of control is a continuing matter and not a new matter arising out of the Bill.
The right hon. Gentleman drew attention to the Exchange Equalisation Account. It is true that because of the overwhelming need of those operating the Account not to be inhibited, in the interests of the country, in the amount which they have available and their use of it from time to time. it has been the practice not to put a limit on it. There is authority for it, but the amount is not limited either in one year or over a period. But it is not right to say that because that is the case—and I address myself particularly to the hon. Member for Worthing—the House has any less information than a team of visiting experts would have. The information on the Exchange Equalisation Account and the working of that Account is available to the Public Accounts Committee. It is true that it is not available to the House. because it is available to the P.A.C. in secret session. The P.A.C. has that information. The account is audited by the Comptroller and Auditor General and the P.A.C. is a Committee of the House. That has been accepted by the House as the nearest we can get to complete and adequate control of the individual transactions within the E.E.A., and that will continue to be the case.
What the right hon. Gentleman is asking in terms of annual control within the authorised limits is not open, because a vote of the House. about which he is talking, would be binding in the way that I have indicated, and no Government could estimate with sufficient accuracy to


enable themselves to be so bound. But they do the next best thing, and very nearly the same thing, in putting forward a fully detailed Command Paper each year—which is not subject to Resolution of the House, for that very reason—giving the best information they can, as we all wish to do.

Mr. Bruce-Gardyne: On the question of the Exchange Equalisation Account, the right hon. Gentleman pointed out that this information was available to the P.A.C. in secret session and, therefore, in effect was available to the House, but today we have all these details gone into at great length by the officials of the International Monetary Fund. If they are given the information, why should not the House have it?

Mr. Diamond: I can see a variety of reasons why we should not depart from a well-established procedure. I do not think that this accountancy exercise provides a suitable or an adequate opportunity for fully debating that matter. There is no reason why it should not be debated, but the House has decided over a number of years that this is the way in which it should be done. I myself think it a reasonable way, and one that effectively gives information—information of detailed operations—in the best way it can be given to the House.
I believe it to be in the best interests of the country that it should continue in that way. I would not propose that we should alter that procedure without very full and careful consideration and debate in the House, which, as I say, cannot take place in an accountancy

exercise like this. I was only seeking to make clear that we were not unaware of the need to have this account examined, as it is, by the servant of the House, the Comptroller and Auditor General.
The control of borrowing which the right hon. Gentleman seeks would not be achieved by his proposals. He is assuming that control of borrowing relates only to the difference between amounts coming into the National Loans Fund and issues from it, but that is not the case at all. It relates also to the difference between revenue and Supply expenditure which, again, is voted on and authorised by the House. The right hon. Gentleman control it—not by himself, but with every right hon. and hon. Gentleman: the House has control in approving the Budget Resolutions, and so on. What the right hon. Gentleman now proposes would cover only one of the elements which go into the total borrowing requirement.
I hope that I have satisfied the right hon. Gentleman that what he proposes would not be a practical way of achieving the kind of control he wants; that it would not be a full method of doing it because other elements enter into the problem, but that information that should be given to the House is being given in all practical respects. I refer in particular to the White Paper Loans from the Consolidated Fund. Having regard to all those matters, I hope that the right hon. Gentleman will feel that his proposal has been given careful consideration but need not necessarily be pressed too far.

Amendment negatived.

10.15 p.m.

Mr. Diamond: I beg to move Amendment No. 3, in page 2, line 19, leave out subsection (7) and insert:
(7) No provision in any Act requiring money to be paid into the Exchequer shall be construed as requiring or authorising money to be paid into the National Loans Fund.
(8) Where the intention is that money be paid into the Consolidated Fund it shall be sufficient to enact that it be paid into the Consolidated Fund (instead of enacting that it be paid into the Exchequer).
There was difficulty, I understand, in Committee because of the wording which originally existed. Therefore it is suggested that new wording should be used to remove the difficulty caused by the phrase "exchange money". I hope that the redraft makes the position quite clear. The subsections involved do not add any substantive provisions. This, in a real sense, is a drafting Amendment.

Mr. Higgins: I think the difficulty was that the wording was incomprehensible. It is now comprehensible and we are very happy that this Amendment should be made.

Amendment agreed to.

Clause 5.

(RATES OF INTEREST.)

Mr. Diamond: I beg to move Amendment No. 6, in page 5, line 18, after 'redetermined', insert 'for further loans'.
With this Amendment we may also consider Amendment No. 7: In line 20, leave out '(for further loans)'.
These are drafting Amendments. There was a suggestion at one time that the prose was not perfect. My hon. Friend the Financial Secretary is always extremely disturbed when any suggestion of that kind is made. He therefore went to great trouble to see that the prose was perfected. I hope that the House will feel that we have moved somewhat towards that goal in these Amendments.

Amendment agreed to.

Further Amendment made: No. 7, in page 5, line 20, leave out (for further loans) '.—[Mr. Diamond.]

Mr. Diamond: I beg to move Amendment No. 8, in page 5, line 26, at end, insert:
(6) The Treasury shall cause—

(a) the rates of interest determined from time to time by them as the lowest rates under this section, and
(b) all other rates of interest determined from time to time by them in respect of local loans,
to be published in the London and Edinburgh Gazettes as soon as may be after the fixing of those rates.
In Committee the Opposition moved an Amendment to require publication of the rates of interest on all loans made from the National Loans Fund. This Amendment provides for the publication of the minimum rate of interest on loans from the National Loans Fund, that is to say the rates required to satisfy the conditions of Clause 5. These generally are the rates for lending to nationalised industries and for Public Works Loans Board quota loan to local authorities, and the bulk of the other lending from the Fund. The requirement for the publication of other P.W.L.B. interest rates, for example on the last resort loans, will remain.
I hope that the House will feel that this is a satisfactory Amendment. It provides information which I think is needed. The Command Paper to which I have made reference gives the fullest possible details of the terms relating to the various loans retrospectively and in this sense I think we are giving Parliament the information it needs.

Mr. Michael Alison: I wish to speak a word of appreciation to the Chief Secretary for helping us over the proposal we made in Committee, but I wonder if I may probe him a little further on the general question of the lowest rate now that we are using that phrase in the Bill. There are so many different rates of interest in the market at any one time that there is a spectrum of rates of interest.
I am particularly concerned to establish more clearly how the Chief Secretary will understand the phrase, "the lowest rate" in the light of the I.M.F. Letter of Intent. He will recall the interesting provisions in paragraph 11 in which the Government commit themselves to the following doctrine:
It continues to be the Government's policy to meet its own needs for finance as far as possible by the sale of debt to the non-bank public and interest rate policy will be used to this end.


It is a matter of some interest to determine what is the lowest rate at any given time particularly the lowest rate in terms of the sale of debt to the non-bank public because this is a specific proviso of the Letter of Intent.
If we have a situation such as prevails today when the Bank Rate the Government have imposed for the time being is at 8 per cent. and therefore borrowing rates in the market are up all round, there seems to be in the mechanics of Government financing a certain possibility to be devious in the way in which they raise money even on the face of things raising it from the non-bank public.
Let me suggest to the Chief Secretary the sort of problem we have in mind. Suppose it happens to be the Government's need, within a period when the Bank Rate is at 8 per cent., to raise more money to meet part of their budgetary needs or to meet part of the net borrowing requirement. Will the Government in those circumstances issue to the non-bank public a medium- or long-term stock with a coupon related to the current Bank Rate at 8 per cent.? Will not they do something quite different—that is, issue a stock in which the non-bank public will not be interested at the sort of coupon it might have, but a stock which will neveretheles3 be taken up by the Departments and sold through the tap at perhaps a very mi.ch later date?

Mr. Speaker: Order. With respect, are not we getting a little wide of the Amendment, which is about publication of rates of interest?

Mr. Alison: I think that you will perceive, Sir, when I apply the point of this; inquiry that the rate of interest comes very directly into this, because if the Treasury issues a stock which is taken up by the Departments and which is not taken up by the non-bank public, bearing a coupon which is not in any way related to the present Bank Rate, it will in fact meet its necessary borrowing requirement by the use of the floating debt. Will the rate of interest which it has to pay to the money market in fact be a rate of interest which will figure at all—

Mr. Speaker: Order. I hope that the hon. Gentleman will understand what I am saying. The Amendment is not concerned with what the hon. Gentleman seeks to discuss. The Amendment relates to whether rates of interest should be published in the two Gazettes.

Mr. Alison: I accept your guidance and your Ruling, Mr. Speaker. I still cannot quite see how the Chief Secretary can specify in the Amendment that the lowest rate of interest will be a figure which will be published, unless he can tell us which rate of interest it is of the various rates which the Government may have to pay which will be published. I hope that the illustration that I have given of the different needs the Government have for financing with different rates of interest applicable will enable the Chief Secretary to give me some reassurance.

Mr. Diamond: With the permission of the House, Mr. Speaker—

Mr. Speaker: Order. The right hon. Gentleman does not need the permission of the House.

Mr. Diamond: I am overwhelmed, Mr. Speaker. The Amendment to which you so clearly drew our attention, Sir, does, in my view too, with respect, deal with publication of rates of interest. The hon. Member for Barkston Ash (Mr. Alison) has asked what I meant by "the lowest rates" of interest or, as I said earlier, the minimum rates of interest. I tried to anticipate that by saying that it means the rate of interest as laid down in the Clause. The Clause prescribes that
The Treasury shall, on each occasion when they determine or approve any such rate of interest for a loan or class of loans, satisfy themselves that the rate would be at east sufficient to prevent a loss if—
(a) the loan… was met out of money borrowed by the Treasury at the rate at which the Treasury are for the time being able to borrow money for a comparable period, and on other comparable terms.
The situation is that, where a loan is being made out of the National Loans Fund, regard must be paid to the period and the other terms, and the loan must be lent at not less than the rate of interest
at which the Treasury are for the time being able to borrow money.


That is the minimum rate. That is the rate in which the public is interested. That is the rate which it is proposed to publish in the two Gazettes. I think that that answers the hon. Gentleman's question, if he will consider the matter with his usual care.

Amendment agreed to.

Clause 6.

(RATES OF INTEREST ON LOCAL LOANS.)

Amendment made: No. 9. in page 5, line 27 leave out subsection (1).—[Mr. Diamond.]

Mr. Diamond: I beg to move Amendment No. 10, in page 6, line 11, at end insert:
section 7(4) of the Local Government (Development and Finance) (Scotland) Act 1964.
This Amendment deals with the rate of interest for Public Works Loan Board loans to local authorities fixed by the Treasury under the Public Works Loans Act, 1897, which has often been used as a basis for other interest rates and which has been referred to in a number of Statutes, some general and some local. The repeal of the 1897 provision by the Public Works Loans Act, 1964, and the introduction at that time of a two-tier interest rate for P.W.L.B. lending to local authorities made it necessary to lay down how these references in other Acts were in future to be interpreted.
The Scottish Local Government Act of 1964 provides that local authorities may advance money in certain circumstances to persons for the erection of buildings, chiefly factories. It was passed after the Public Works Loans Act, 1964, and contains a reference to the lower of the rates fixed under that Act, and it provides that these advances shall carry interest at a rate not less than ¼ per cent. greater than the lower rate fixed by the Treasury under Section 2 of the Public Works Loans Act. The repeal of the 1964 Act means that the provision in the Scottish Act must be altered.
This Amendment and the Amendment to Schedule 6, to which, perhaps, I may refer at the same time, bring the Act into line with the other Acts listed in the Clause. The Treasury direction under Clause 6 will cover this Act as well as the others and will specify that

the lower P.W.L.B. rate shall apply in respect of this Act.
I hope that, with that clear and lucid explanation. the House will accept the Amendment.

Amendment agreed to.

Clause 9.

(PROFITS OF ISSUE DEPARTMENT OF BANK OF ENGLAND.)

Mr. Diamond: I beg to move Amendment No. 12, in page 7, line 22, leave out subsection (2) and insert:
(2) The assets held in the said Department shall be valued, at market prices, at such limes and in such manner as may be agreed between the Treasury and the Bank of England, hut at least once in each financial year.
This Amendment arises out of a discussion in Standing Committee when the Financial Secretary explained that the Issue Department's portfolio was and would continue to be valued on the basis of market price. My hon. Friend undertook to put down an Amendment on Report prescribing valuation at least once a year, and he undertook also to examine the possibility of a further Amendment laying down market price as the basis for that valuation. This Amendment implements both undertakings.

Mr. Higgins: I become a little worried when the Chief Secretary describes his own speeches as clear and lucid. As he rightly said, this Amendment arises from a debate in Standing Committee on 1st February, reported at column 157 and following of the OFFICIAL REPORT. He will recall that on that occasion we pressed, first, that the figure should be published frequently—we thought at least once a year, and we are glad that he has met that point—and second, we pressed that valuation should be not as originally prescribed, which left the whole matter open as between various Government bodies, but that it should be a valuation at cost. Our original Amendment suggested that it should read:
…on 31st March at both cost and market value and published.
While we welcome the Amendment, I am not entirely clear why we could not have the additional figure as well, that is, a valuation both at cost and market value. That is what we originally asked for and hoped that we might well get.
Could the Chief Secretary therefore explain why we are not to have both sets of figures? It is very important to know to what extent the National Loans Fund is or is not making a profit on its various transactions. The variations in the values can make a considerable difference to the amount which the Fund and, in turn, the Government must borrow in the market.

10.30 p.m.

Mr. Diamond: I agree that borrowing is affected by the valuation. That is why it is necessary to put down the basis of valuation and the periods over which it will take place, but historical cost does not affect the situation. I thought that we were meeting the hon. Gentleman's essential point by describing the basis of valuation.

Mr. Higgins: The point is simply that it is a question of the cost of the specified asset. We shall apparently have a breakdown of the various assets held. The Fund may have purchased or sold particular assets and what it bought and sold them for and what the aggregate of the profits and losses may be, clearly mike a difference to the Fund's profits. In addition to the two points that we are glad the right hon. Gentleman covered, we hope for that additional information.

Mr. Diamond: I shall look into this. We are in the difficulty that my hon. Friend the Financial Secretary, who dealt with the Committee stage, is unavoidably absent, being out of the country on behalf of the Government. I cannot undertake to do anything about the matter, because I understood that full consideration had been given to what the hon. Gentleman argued in Committee, and that we were meeting the essense of what he required. But I undertake to look at it, not with a view to doing anything about it, but, if necessary, having a word with the hon. Gentleman or writing to him.

Amendment agreed to.

Clause 12.

(POWER OF TREASURY TO BORROW.)

Mr. Alison: I beg to move, Amendment No. 13, in page 10, line 21, to leave out from ' raised ' to ' and ' in line 22 and insert:

'only by the creation and issue of securities or as provided in subsections (5), (6) and (7) of this section'.
The Amendment owes its inspiration to my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). I hope that he will be able to elaborate on my few words and further expound its value. It is not unrelated to the earlier series of Amendments, the object of which was to try to tighten up the process of Government financing, or at least the surveillance which the House has over that method of financing.
The Amendment gives us the opportunity to consider, perhaps in slightly more detail, how vital it is that the whole machinery of Government financing should be tightened, and at the same time it gives us another quick look at some of the extraneous sources of finance which the Government have at their disposal, and over which Parliament has remarkably little power of scrutiny.
The first reason we feel that we want this tightening up process is the enormous and growing scale of Government expenditure, of which the Chief Secretary must be very well aware. I am not referring simply to the social services expenditure, which in many ways is by no means the one which makes the big inroads. It is the huge volumes of capital raised by the Government, and to be raised in future through the National Loans Fund, for onward transmission to the nationalised industries. When one reflects on how the scale of the financing has grown in the last five or seven years one becomes acutely aware of the need to keep a grip on it.
The second point is the way in which this juggernaut of Government expenditure has gone on even in periods when the Government have allegedly been imposing a squeeze. One of the most significant episodes we have had under the present Government was surely in the year beginning July, 1966, when the Government imposed a squeeze on the economy allegedly designed to extract£500 million worth of spending power, on demands on goods and services, by means of the tax apparatus, and at the same time increased the expenditure for which the Exchequer was responsible by more than they took out of the system


through taxation—about£725 million extra Exchequer expenditure at a time when they were reducing expenditure by the private citizen to the extent of£500 million a year. The case is very formidably argued in "The National Recovery Programme." Perhaps the Chief Secretary will make an allusion to that.
It is not only the scale of Government expenditure and the tendency for it to increase relentlessly. The real difficulty that we face in the present situation is the corresponding difficulty the Government find in meeting the extra outlay that they have to make by genuine borrowing. This is where the various extraneous sources come into operation which we hope we shall he able to pinpoint and eliminate by our Amendments.
In considering the Exchequer net deficit, the large gap to be financed outside the tax-paying system, I remind the Chief Secretary that in the quinquennium 1961–66 the Government's domestic borrowing—the amount they were able to borrow in terms of Government marketable securities, sales of stocks and shares to the buying public—was able to be precisely counterbalanced only by the amount that they were able to raise in non-marketable securities. They had to pay more back in terms of market securities—short-term, medium-term and long-term bonds sold to the banking and non-banking sector—than they could borrow. So the Government were net losers, a serious situation for them. They were able to meet their requirements in terms of actual loans from the public by the various non-marketable obligations which they incurred through the Post Office and Trustee Savings Banks and the rest, but they were net losers to the extent of nearly£500 million on their dealings with marketable securities. The market is glutted.
Also, in conditions in which inflation is rampant it is not surprising that the public are not interested in medium-term and long-term gilt-edged securities whose capital value is almost bound to depreciate, which is no hedge against inflation. The Government are finding themselves in a progressively worse position, loans to the public on medium- and long-terms by the Government being more and more unacceptable to the public. The whole

tendency is for borrowing to have to switch increasingly into the short end of the market, with all its problems of the increasingly liquid base, the banking system and the general inflationary tendencies in the economy.
It is because the Government are finding that the market is glutted with the traditional kind of Exchequer instruments—the loans and issues of medium-and long-term—that they are tending to have recourse to these various extraneous sources. We have touched on one. The right hon. Gentleman was kind enough to make a reference to it and try to give us reassurance. It is the sterling market equalisation account as a result of the gold and dollar currency and corresponding inflow of sterling, which goes on to the Exchequer and helps with its financing problems.
But it is not enough simply to say that the Public Accounts Committee has access to the way this is managed and engineered and how much the Government get out of this Exchange Equalisation Account. The real problem is that the Government should not be using this once-for-all source of financing. They should not be living on this sort of capital. If there is an outflow of currency and a corresponding inflow of sterling, so that the Government can use this windfall of sterling, the whole situation in which gold and foreign currency is flowing out on a grand scale and making us lush with sterling is one in which the Government should cut back on this juggernaut of expenditure.
Yet the Chief Secretary says that all is well, that the Public Accounts Committee can have access to it. But that is part of the problem. The Bill does not give a really sound instrument to control Government expenditure in the sense of regulating the basic health of the economy. The same applies in the case of another extraneous source which is not, strictly speaking, mentioned in the Bill—the sterling accruing to the Exchange Equalisation Account not through the loss of gold and foreign currency but because the Government are borrowing overseas. If they are borrowing overseas, and the money comes in in the form of gold and dollar currency—as naturally it will—in short-term expenditure, one has to think of repaying it and getting out of debt as soon as


possible. It creates a surplus of sterling requirements to the E.E.A. which gets back to the Exchequer for financing purposes. This again is a once-for-all source which the Treasury can use for the Government's financing sources. But it is an illegitimate source for the Government's day-to-day financing, and we have no control over this sort of financing.
There is also the scandalous ability the Government have through the fiduciary issue—the issue of notes and coins. I recall the striking passage used in the Radcliffe Report—admittedly under a Tory Government—when it was said that the Treasury was able to meet the Government's financial needs to the extent of£700 millions over a period of five or six years through the fiduciary issue. This, of course, is tantamount to saying that they printed money. No wonder that sometimes the Directors of the Bank of England include famous newspaper proprietors with excellent access to printing machinery. This seems one of the traditional ways of financing the Government's own deficits.
Then we have a source which is an item which appears in the pro forma of the accounts which the Financial Secretary gave us—interest-free notes, which is a useful source of funds to the Treasury to which the Treasury can have access and which will appear on the National Loans Fund Accounts in future.
Interest-free notes, I understand, is a situation which arises when the Government have to borrow massively from the I.M.F. and either receive foreign currency from it for bailing out purposes in this country and they correspondingly have to send the I.M.F. sterling equivalent in interest for exchange for foreign currency they receive from the Fund. As I understand this matter of interest-free notes, the I.M.F. lends back to the Government the sterling which they originally exchanged for foreign currency. They have the best of both worlds. They have foreign currency to get them out of a jam, and they use the sterling which they have set apart. This item of interest-free notes is thrown into the kitty for the Government's juggernaut process of huge outlays, with no control over the underlying economic situation which

gives rise to the need for these loans and the outflow of confidence in sterling which the loans represent.
10.45 p.m.
All these other sources which my right hon. Friend the Member for Thirsk and Malton is trying to pin down in this Amendment, outside the strict issue of securities, outside the methods specified in subsections (5), (6) and (7), have grave disadvantages. They are not, strictly speaking, susceptible to Parliamentary control in terms of the volume of funds upon which hands can be laid for Government financing purposes. Nearly all of them represent once-for-all sources, which means in effect living on capital—the Exchange Equalisation Fund, the interest-free notes and all the rest of it. There is no real discipline imposed upon the Government in their onward march of Government financing. For these reasons we want to pin the Government narrowly down and to turn the tourniquet on these sources in all sorts of different quarters which flow into the Government—the I.M.F., loans overseas, the run on sterling and all the rest of it.
Finally, one should mention this mysterious facility which we know the Government have even when they increase the floating debt, which is a form of issue of securities about which we all know and which is permitted by my right hon. Friend's Amendment. Even when they finance themselves through Treasury bills and the floating debt, there is this mysterious and inflationary technique through the use of the Bank of England of the giving of help, as it is euphemistically called, to the market, under which, when the Government want to borrow from the market and the market has not got the money, the Bank of England dips into the kitty, buys Treasury bills and short-dated or even medium-dated securities in order to get the money to lend back to the Government. So we get this vicious circle of inflationary finance.
We believe there are real gaps in the financing facilities of the Government over which Parliament has no control, and we want to see this haemorrhage finally healed.

Mr. Nicholas Ridley: Mr. Nicholas Ridley(Cirencester and Tewkesbury) rose—

Mr. Diamond: With respect—I offer no discourtesy to any hon. Member—having listened carefully to the extremely long speech of the hon. Member for Barkston Ash (Mr. Alison), who built up an enormous political and inaccurate case on the basis of this Amendment, I thought it would be appropriate for me to reply immediately so as to remove any misconception.
What the Amendment deals with, as opposed to what the hon. Gentleman entertained us with, is the removal of certain words. The Amendment proposes that the following words shall be removed:
…in such manner and on such terms and conditions as the Treasury think fit…
The hon. Gentleman wishes these words to be removed, and it was on that basis that he gave us his interesting and entertaining speech.
I want to make it absolutely clear straight away, therefore, that what he is proposing is that powers which the Treasury has had in these precise words since 1919 should be withdrawn.

Mr. Ridley: Too long.

Mr. Diamond: I wonder how many times the hon. Gentleman said that when his party was in power. I am resting myself quite simply on the proposition that these words and these powers were thought right in 1919 when they were first introduced. They were confirmed in the National Loans Act, 1939. They have been there ever since. They have been found right and we propose to continue them. I reject the Amendment.

Mr. Ridley: The Chief Secretary has done no service to the House by rejecting the Amendment with such a cursory argument. He says merely that because it has been the custom since 1919 that the Treasury should, so to speak, "fiddle the books", he does not see why the Treasury should not continue to fiddle the books from now on. This is the root cause of the maladie anglaise. It is this money printing which, the Chief Secretary knows, goes on which is doing our currency in. It is no argument to say that, because the Tories did it, as did the Labour Government before that and the Tories before that, right back to 1919, it should be sacrosanct and that it

is wrong for us to question it, or to suggest in any way that it should be stopped.
The Amendment would prevent the Treasury from raising money through the National Loans Fund by increasing net indebtedness to the Bank of England Banking Department, or increasing the notes and coins in circulation. Those are two rather sophisticated forms of money printing in which the Treasury is currently engaged.
I have taken the trouble to arm myself with the figures to see to what extent it is being done. I said earlier that it has been done by Governments of both parties for many years, but what is alarming is the extent to which it has been accelerated by right hon. Gentlemen opposite. The difference between net borrowing requirement and taxation surplus may not be the most important figure, but it is the figure which I have been studying. This is the figure which is made up by borrowing abroad, by borrowing at home, by a reduction in our gold and dollar reserves and by printing money. It may interest the House to see the way in which the figure has suddenly leaped. In 1958. it was£182 million; in 1959,£314 million; in 1960,£394 million; in 1961,£211 million; in 1962,£66 million; in 1963£478 million; in 1964,£386 million; in 1965,£576 million; in 1966,£740 million; and in 1967,£943 million.
Those are by no means figures of which we can be proud. They show a rapid acceleration and the failure of the Government to borrow the money which they claim to be borrowing. It would not be so bad if this money could be borrowed from the public, but that cannot be done—it would be out of order to explain why now. Suffice it to say that we do not borrow this money, but we have funded it. partly by borrowing abroad and partly by printing. We are therefore right to try to write some disciplines into the Bill.
In Committee the Financial Secretary tried to suggest that it would be wrong of Parliament, myself in particular, to try to write into the Bill anything which would bind future Chancellors of the Exchequer, which would bind future Governments in future years, about how to conduct the nation's financial affairs, because Parliament could never bind itself


for the future. But every other country dos bind itself for the future. West Germany, for example, has a constitutional law which limits what the Government may borrow short, either from the Bundesbank or by the issue of Treasury notes, to£300 million at any one time—

Mr. Diamond: There is nothing in the Amendment about limiting it.

Mr. Ridley: The right hon. Gentleman is wrong. The Amendment would limit the Government by preventing them from using foreign borrowing or increasing their net indebtedness or increasing the fiduciary note issue to finance their schemes and the vast amount of capital which they dish out to their creatures, like the Transport Holding Company and the National Coal Board. It is this vast flow of money, which they call capital, to the nationalised industries, which is bringing our currency into disrepute. The Chief Secretary knows that. At least they should raise it honestly on the market or from the citizens to cover this profligate spending.
The argument that the House should not know in advance does not hold water. Going on the gold standard and having gold behind one's currency is a discipline. The Germans do it by the law which I mentioned. There are millions of disciplines and now the Government have one, in the form of the I.M.F. string that the net borrowing requirement should not exceed£1,000 million. I would have preferred a limit of£100 million, which would have been a much more realistic straitjacket for the Government and would greatly have benefited them.
The Amendment is very important. The fact that it is late at night, at the tail end of a Bill which has not aroused a great deal of interest, should not take the House's attention from the fact that my hon. Friend is here proposing a means of limiting the amount of bogus money which the Government can print—[Laughter.] It is no good laughing at this. This is not a technicality: this is where the currency is being eroded. For every£100 in a citizen's pocket, a few£s extra is being printed, so his£100 is worth less. It is this constant process, when the Government's credit has evaporated of printing or borrowing

abroad at high rates of interest to make up the borrowing which has destroyed our financial standing and the honesty of our currency.
I earnestly expect the Amendment to be accepted because it contains Parliament's first serious attempt to put some shackles on this rake's progress. This is not a laughing matter, but a very important point. Everything which my hon. Friend said is true, except that he said it in such a sophisticated and charming way that it might not have been immediately apparent to the Chief Secretary. The Chief Secretary's answer—that, because he had been doing it for 50 years he would go on doing it—was not worthy of him. I hope that he will reply in detail.

Mr. Turton: It is curious that, when right hon. Gentlemen get on to the Treasury Bench, they become more and more reactionary the longer that they are there. I am surprised that the Chief Secretary, whom I used to know in the old days as a progressive Member, now has this reactionary tendency, and argues that, because something has been going on since 1919, we cannot change it.
My hon. Friends have put the case for the Amendment very clearly. What is wrong with this country is, unfortunately, the Treasury quasi-automatically creating money, and it is dealt with in the Clause. I fear that the Amendment does not go nearly far enough to stop the Treasury. At least, it gives them a certain amount of fresh discipline to try to stop what has been going wrong. I do not say ever since 1919, but I certainly say in a period of six years, extending back to the time before the Chief Secretary entered the Government.
11.0 p.m.
We are asking why the Treasury should have power to raise money in any way it likes. If it wants that power, let the Government define it in the subsection. We have provided that the Treasury can raise money under subsections (2), (5), (6) and (7). What more does the Treasury want? I know that it is a dangerous way to raise money by Treasury bills. If the Government want another paragraph dealing with some queer transaction through the Exchange Equalisation Account, no doubt that


could be inserted if the right hon. Gentleman will recommit the Bill for that purpose.
I beg the Government and the right hon. Gentleman to think deeply and clearly on this subject. What has gone wrong has happened not merely with the present Government, although, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) has said, they have been using the printing machine for creating money to a far greater extent than their predecessors did; but their predecessors did it, too. That is the kernel of the matter.
It is no good merely trying to cut the social services. What must be done is to stop the inflation of money at the source, which is here. On an earlier Amendment, the right hon. Gentleman said that the Bill was merely an accountancy measure. Clause 12 goes into a different field. It gives the Treasury power to inflate the currency. We ask that that power should be limited. If those outside the House of Commons read the reply given by the Chief Secretary to the Amendment, they will realise the danger from which the country is suffering from him and those who hold office with him.

Mr. Diamond: I rise to respond to the right hon. Member for Thirsk and Mahon (Mr. Turton), who was courteous in his comments, and to assure him that I trust that I have become no more reactionary than I have always been and to make clear to him that if the Amendment dealt for one moment with a limitation of inflationary tendencies, I would be only too happy to respond.
The Amendment has nothing whatever to do with that, nothing to do with the speech of the hon. Member for Barkston Ash (Mr. Alison) and still less to do with the speech of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). What the hon. Member for Cirencester and Tewkesbury wanted to do was to stop the Government having the power to provide the nationalised industries with the means they need, to cut the nationalised industries' throats. That is as plain as a pikestaff.

Mr. Ridley: Mr. Ridley ros—

Mr. Diamond: I will give way later.
The hon. Member for Barkston Ash revealed his intention to anybody who has the minimum knowledge of psychiatry. He talked about pinning the Government down and turning the tourniquet. That is what he would love to do. Unfortunately, we are talking about means by which the Government borrow—not amounts which the Government borrow, not increasing amounts, minimum or excessive amounts, but the means by which the Government borrow. That is what the Amendment refers to.
All that the right hon. Gentleman and his hon. Friends are seeking to say is that whereas since 1919 the Treasury has had power to borrow in the most economic and sensible way, in the interests of the Government and of the country, now, because there is a Labour Government in power and no longer a Conservative Government, the Treasury should be limited in its borrowing facilities so that borrowing should be made more expensive to the Government and, perhaps, more remunerative to the lenders. Who knows?

Mr. Ridley: Mr. Ridley ros—

Mr. Diamond: I will give way later, not now. I want to make the answer clear, because the hon. Member appealed to me to give him an answer. His speech was totally irrelevant to the narrow point of the Amendment, which seeks to deal with borrowing powers and to limit them in a certain way. It limits it in a way which the Treasury has never had it limited, and it would be against the interests of the Treasury, against the interests of the Government, against the interests of the people of this country who have to pay the amounts which borrowing money requires to be paid to service the loans. It would merely be putting a halter round our necks to provide for the political views of the hon. Gentleman who loathes, despises and hates nationalised industries, and of the hon. Member for Barkston Ash who hates this Government and everything to do with them. Having made that moderate and conciliatory speech I will now give way.

Mr. Ridley: I am grateful to the Chief Secretary for giving way. I did not say the nationalised industries ought not to have money. What I did say was that, instead of giving the Government


power to print money to give to the nationalised industries, we should insist that they borrow money from genuine lenders. I hope the right hon. Gentleman will retract the remarks he made about me. If he looks at HANSARD he will find that I did not for one moment say that nationalised industries should not have money lent them, but that they should genuinely borrow from genuine lenders and not have the money printed on the Government's filthy printing presses. I should be grateful if the right hon. Gentleman will deal with that point and not with one which I did not make.

Mr. Diamond: It is a pleasure. I heard what the hon. Gentleman said. I am withdrawing nothing, because I heard the hon. Gentleman use words which described precisely the kind of attitude which I attributed to him.
I will now deal with the other question which I did not hear the hon. Gentleman raise, but which has been raised, and that is, why did the Conservative Government depart from having the nationalised industries borrow from the market? Why did the Conservative Government suggest that the nationalised industries should borrow from the Government and why have we continued it? The answer has been given many times—because it is cheaper. It is a cheaper way of borrowing, and we do not propose that the nationalised industries should be burdened with expensive loans even to conform to the hon. Gentleman's ideas.

Mr. Ridley: Mr. Ridley rose—

The Deputy Chairman: Order. The hon. Member has exhausted his right to speak.

A mendinent negatived.

Clause 14.

(EXCHANGE OF SECURITIES, ETC.)

Mr. Diamond: I beg to move, Amendment No. 14, in page 12, line 25, to leave 'arrangements or'.
With permission, I will speak to Amendment No. 15 at the same time, because the two Amendments go together. They are drafting improvements to the Clause, following discussion in Committee.

Mr. Ridley: I am grateful to the right hon. Gentleman for proposing these two Amendments to meet a point which I raised in Committee. They greatly improve the Bill.
While I am grateful to him for making the Amendment. I would ask him to reconsider his answer to the last Amendment. [HON. MEMBERS: "No. Order.I It was far less worthy of him. I hope he will do so in the morning.

Amendment agreed to.

Further Amendment made: No. 15, in page 12, line 30, leave out 'arrangement or'.—[Mr. Diamond.]

Schedule 6.

(REPEALS.)

Mr. Diamond: I beg to move, Amendment No. 16, in page 35, line 56, column 3, at end insert (1).
This is an Amendment to limit the repeal to Section 4(1). Subsection (2) is still needed. Therefore, this is a necessary Amendment.

Amendment agreed to.

Mr. Diamond: I beg to move Amendment No. 17, in page 39, line 26, column 3, after ' (4) ' to insert:
' the words "out of the Consolidated Fund" and'.
This is only a minor tidying-up of Amendments made by the Bill to the European Monetary Agreement Act, 1959.

Amendment agreed to.

Further Amendment made: No. 18, in page 46, line 47, at end insert:


1964 c. 67
The local Government (Development and Finance) (Scotland) Act 1964.
In section 7(4) the word 'lower' and the words 'under section 2 of the Public Works Loans Act 1964'.—[Mr. Diamond.]

Mr. Diamond: I beg to move, That the Bill be now read the Third time.

11.11 p.m.

Mr. Higgins: I shall not detain the House for more than a few moments, but it is right, given the great deal of scrutiny that the House has rightly given to the Bill, that we should say how much we appreciate the way in which, in Committee, the Financial Secretary produced


a format of accounts which showed the basis on which the accounts are likely to be produced under the Bill, as it stands, when we discuss the Budget. It will be agreed that this year's Budget will be one of the most important in our country's history and it is therefore fortunate that we have been able to scrutinise the exact form of the accounts in advance, and also to implement a number of drafting Amendments.
As for the present form of the Bill, the Chief Secretary was rather uncertain about my point concerning the difference in the basis of the valuation of assets and the market value. If he will study what was said in column 163 of the Committee proceedings—as he has been kind enough to say he would—he will appreciate more readily the point that I have in mind.
Earlier on I loosely confused the National Loans Fund and the profits of the Issue Department. It is important to have both sets of figures. As it stands, under the relevant Clause the Treasury has discretion as to how much of the excess of market value over cost is transferred to the National Loans Fund. If the transfer takes place under the Clause we need to know what percentage of the difference has been transferred, because it affects the overall borrowing requirement.
This brings me to the only point of technical controversy that has arisen, namely, the definition of the borrowing requirement and, in particular, the borrowing requirement as specified in the letter to the I.M.F. written by the former Chancellor of the Exchequer—now the Home Secretary. We are still very unhappy because we feel that the concept which has been given such prominence and importance in the letter to the I.M.F. has not been sufficiently defined in a way to enable the House to appraise the extent to which the Government have achieved the objective which they have declared. This is a difficult question in relation to the effect on the Exchange Equalisation Fund, and I would have hoped that the Bill made this clearer.
On the overall basis, however, the Bill has made improvements in our accounting procedure. It is fortunate that we have been able to have such constructive debates in Committee and this even

ing. It is a much better Bill than it was on Second Reading, and on that basis we will support it this evening.

11.14 p.m.

Mr. Turton: The Bill, in respect of the provision of information, is a great advance. I hope that we will use it to make it a more effective measure of Parliamentary control on Government borrowing. It is in the interests of hon. Members on both sides of the House, and the country. It may be that the Bill was never intended to seek out the causes of the inflation that is troubling this country. When the present Home Secretary made his statement in the last Budget many of us thought that he would attack that problem, but to that extent the Bill, with its present content, is a slight disappointment. I believe that this Bill can be used to give us more effective control after we have received this information.
Apart, perhaps, from a rather foolish little verbal sally by the right hon. Gentleman on the last Amendment, one remark with which I disagreed was that of my hon. Friend the Member for Walsall, South (Sir H. d'AvigdorGoldsmid), who has now left us. He said that as Mr. Pierre-Paul Schweitzer would now be looking at the books we in Parliament had no need to do so. I think there is a very much more need for us to do so, especially when Mr. Pierre-Paul Schweitzer and his team are coming round.
That is why I hope that the Chief Secretary will convey to his right hon. Friend the Chancellor of the Exchequer the appeal that in working out the Bill he will so present his Financial Statement that Parliament may have an opportunity to have a separate debate on the net borrowing requirement each year at Budget time. That would be a very great help to Parliament's control of expenditure, because by this means we would be looking at the capital account.
I welcome the Bill. It is excellent, though limited in its scope.

11.16 p.m.

Mr. Diamond: With the permission of the House, I am grateful for what the hon. Gentleman the Member for Worthing (Mr. Higgins) and the right hon. Gentleman the Member for Thirsk and


Malton (Mr. Turton) have said in welcoming the Bill. It is limited in concept, and limited for the reason to which I earlier referred, that although my right hon. Friend the Home Secretary did, as the right hon. Gentleman quite rightly describes, refer to the possibilities of considering major change, when this consideration took place it was found that the most we could usefully do, at present at all events, was what has now been described as an accountancy exercise. That is why we do not propose more than is in the Bill; and why it seemed that the discussion would inevitably have to be somewhat limited.
The right hon. Gentleman has said that the Bill gives further information, and it is intended to give further information. I assure him that I am absolutely at one with him in saying that right hon. and hon. Members should have the fullest possible information to enable them to conduct the debate in as informed a manner as is possible. I hope that the Bill will help to that end.
We are anxious to get the Measure through so as to be able to provide the new form of accounts in the forthcoming Budget which, I am told, is to be expected in due course. With the goodwill of the House, therefore, I think that we should now send it on its way so as to be ready in good time.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

NATIONALISED INDUSTRIES

Order read for resuming adjourned debate on Amendment to Question [1st February], That a Select Committee be appointed to examine the Reports and Accounts of the Post Office and of Nationalised Industries established by Statute whose controlling Boards are appointed by Ministers of the Crown and whose annual receipts are not wholly or mainly derived from moneys provided by Parliament or advanced from the Exchequer:

Which Amendment was, in line 2, to leave out from the word 'Industries' to the second word 'whose' in line 3 and to insert the words 'and other bodies in which the State has a controlling interest', instead thereof:

Question again proposed, That the Amendment be made.

Mr. Trevor Park: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question put and agreed to.

NATIONALISED INDUSTRIES

The Select Committee to consist of Eighteen Members:

Mr. Michael Alison, Mr. David Crouch, Sir Henry d'Avigdor-Goldsmid, Mr. John Forrester, Mr. Norman Haseldine, Mr. John Homer, Sir Donald Kaberry, Mr. Richard Kelley, Mr. Russell Kerr, Colonel Lancaster, Mr. Ron Lewis, Mr. Michael McGuire, Mr. Ian Mikardo, Mr. Trevor Park, Mr. J. T. Price, Mr. Nicholas Ridley, Mr. David Watkins, and Mr. David Webster:

So much of the Minutes of Evidence taken before Sub-Committee A appointed by the Select Committee on Nationalised Industries in the last Session of Parliament as was reported to the House on 26th October 1967 referred to the Committee:

Power to send persons, papers and records, to adjourn from place to place, and to report from time to time:

Power to report from time to time the Minutes of Evidence taken before the Committee:

Power to appoint persons with specialist knowledge for the purpose of particular enquiries, either to supply information which is not readily available or to elucidate matters of complexity within the Committee's order of reference:

Five to be the Quorum:

Power to appoint Sub-Committees and to refer to such Sub-Committees any of the matters referred to the Committee:

Every such Sub-Committee have power to send for persons, papers and records; to report to the Committee from time to time; and to adjourn from place to place:

Three to be the Quorum of every Sub-Committee:

Committee have power to report from time to time any Minutes of Evidence taken before such Sub-Committees.—[Mr. Ernest G. Perry.]

CIVIL AVIATION BILL [Lords]

Order for Second Reading read.

Motion made, and Question put forthwith, pursuant to Standing Order No. 60A, That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

CIVIL AVIATION [MONEY]

Queen's Recommendation having been signified,—

Resolved,

That, for the purposes of any Act of the present Session to amend the law relating to aerodromes, aircraft and civil aviation, it is expedient to authorize—

(1) the payment out of moneys provided by Parliament of—

(a) any sums required by that Act to be so paid; and
(b) any increase attributable to that Act in the sums falling to be so paid under any other Act;

(2) the payment into the Exchequer of any sums required by that Act to be so paid.—[Mr. Diamond.]

LEGITIMATION (SCOTLAND) BILL [Lords]

Order for Second Reading read.

Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to the Scottish Standing Committee.—[Mr. Ernest G. Perry.]

Question agreed to.

Bill (deemed to have been read a Second time) committed to the Scottish Standing Committee.

ROAD TRANSPORT (DANGEROUS SUBSTANCES)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]

11.20 p.m.

Mr. John Horner: Most people are aware that the transport of petroleum spirit in bulk through the cities, towns and along the roads of these islands is strictly regulated under legislation which this House approved 30 years ago. I believe that few people are aware that the transport of substances which in certain circumstances can be equally as dangerous as petroleum spirit takes place in considerable quantities every day along the roads and through towns and cities of these islands without any regulations to control them and subject to no statutory precautions. They are an ever growing hazard to the public and a very real danger to the members of the emergency services, particularly the fire services, who are called in to deal with the effects of the increasing number of accidents involving tanker lorries which are laden with these uncontrolled inflammable and explosive cargoes.
If few people would credit that statement, I think hon. Members will find it incredible that for nearly 10 years the Home Office has been trying to work out a means of identifying and clearly marking these dangerous tanker lorries but so far have achieved no success, let alone attempting to tackle the job of controlling the use of these lorries. That decade of ineptitude and delay on the part of the Home Office has been punctuated from time to time with assertions by various Ministers that action was about to be taken. Those assertions have usually been followed by long periods of apparent inactivity so that firemen, who are particularly concerned about this matter, have almost abandoned hope that the Home Office will ever succeed in finding a solution to this not very complex problem.
The years of delay and the unfulfilled promises have now become a bad joke in the fire service. It is a joke which could turn to tragedy. If their luck runs out and firemen are killed because of the Government's failure to give the fire


service the help it needs to deal with these growing dangers, the account I now propose to give the House of the many years of delay will clearly show where the blame must be squarely placed. That luck can run out tonight.
About ten years ago, it became clear to all concerned that the rapid and continuing growth of transport by road of an ever mounting number of new and dangerously inflammable explosive and corrosive chemicals in uncontrolled quantities in unsupervised tankers and lorries needed some regulation and control. In 1959, therefore the Home Office set up a Working party on Inflammable Substances. So far as I can trace, 1959 was the year of its first and last meeting. It did set up however a committee, another working party, to tackle the job of identifying and making these dangerous road tankers.
In September 1961, the Scottish fire service was involved in Perth in a serious incident when an unmarked tanker which was filled with about 2,000 gallons of a highly corrosive but, to the firemen, unknown substance led to the Scottish local authorities wanting to know from the Scottish Home Department what was being done to bring under control the hazards which arise from the movement of these highly dangerous cargoes along our roads. According to the Scotsman, a Home Office spokesman was reported to have said that
A scheme for such control has been accepted in principle but has not yet been finalised".
A few months later, in Hereford, an unmarked tanker containing 4,000 gallons of styrene was involved in an accident. There being no marking, the firemen did not know what the substance was with which they had to deal. There were, therefore, urgent public demands made to the Home Office by chief fire officers for some sort of action.
A few months later, in West Bromwich, a lorry carrying methyl peroxide, again unmarked, blew up, damaging about 16 houses, injuring 30 people, who were admitted to hospital, and doing nearly£100,000 worth of damage. To quote the report of the chief fire officer on that occasion,
Seeing his lorry was on fire, the driver took it to a piece of waste ground. One cannot help wondering what would have been the

casualty list if this explosion had occurred in a busy town centre".
The lorry had just left Walsall and was to travel to Oldbury. Oldbury is in my constituency. If that lorry had blown up in the busy town centre of Oldbury, I cannot imagine, as the chief fire officer says, what the casualty list would have been.
Again, there was a demand from the fire service, particularly from the Fire Brigades Union, for control and marking of these tankers. In July, 1962, the Home Secretary's Advisory Council for the Fire Service was told by the Home Office that a code of tanker markings had been circulated to local authorities for their observations. I have not been able to trace that code.
In the following year, members of the emergency services in Cheshire were involved in a dangerous incident when an overturned tanker lorry, again unmarked, turned out to be charged with a highly dangerous compound, a compound of lead oxide. In fact, the men turned yellow, and remained yellow for many days. The compound was so dangerous that, had it been ingested by the men to any degree on that occasion, they could have suffered considerably. So the Cheshire County Council and the Urban District Councils Association approached the Home Office again for action on these poisonous cargoes. They were told that the matter was now with the Ministry of Transport and with the Home Department.
In 1965, the Lancashire County Council, whose fire brigade is almost weekly engaged in dealing with incidents involving chemical cargoes carried by tankers, because Lancashire is one of the main centres of the chemical industry, approached the Home Office. In April 1965, The Guardian reported a Home Office spokesman as saying,
International agreement on the carriage of dangerous chemicals by road is imminent.
It was so imminent that the following month the Under-Secretary of State, in answer to a Question, said that there was now no hope of getting international agreement and that therefore the working party which had been set up in 1959 was to be disbanded and a new body, called the Standing Committee on


Dangerous Substances, would be established to deal with the whole business urgently.
Firemen, who have been waiting for years for a simple system of marking dangerous loads so that they could readily know what they were dealing with in the case of fire or accident, might be forgiven if they wondered what all the rigmarole was about international agreement being necessary and then not being obtained. In April, 1966, all chief fire officers were told by the Home Office that it was preparing a set of symbols for use as tanker markings. Later in the year the Under-Secretary of State announced that draft regulations had been settled and would come into effect in 1967. In answer to a Question in April, 1967, my right hon. Friend the Home Secretary said that the regulations would be applied soon. Here we are in the early months of 1968 and the fire service is still awaiting them.
Meanwhile, the list of near-misses mounts up. Sheer mathematics tells us that there is not much time left before we have a disaster. In September, 1966, a tanker and trailer containing about 33½tons of butane were hit by a locomotive and trapped on a level crossing at Harwich. The tanker carried no markings. Last autumn firemen in Yorkshire were called to deal with a tanker marked as carrying formic acid. They later discovered that they were dealing with butane alcohol, which has a flash point just two degrees Fahrenheit above that of petroleum spirit. Last year, a tanker out of control crashed into Dewsbury town hall. Firemen were called by the police to a tanker crash involving butane. The driver was dead. The tanker was in fact loaded with liquid ethylene, one of the most highly explosive materials now being carried on the roads of this country.
What do firemen want? First, they want a simple system of marking dangerous tankers. With the driver very often unconscious or dead, they want a system whereby they know immediately whether the cargo with which they are dealing is inflammable, explosive, toxic or corrosive. They want to know its chemical base, and whether it should be handled by foam or water and so on.
Incidentally, if water had been used on liquid ethylene in the Dewsbury case it would have been fatal not only to the users of the water but to anyone within a very considerable radius of the accident.
Firemen want control of the vehicles in a manner identical to that in which the Petroleum Act controls the passage of petroleum spirit through our towns. They want the same parking regulations as that Act imposes on tankers carrying petroleum spirit. They want limits set to the amount of these dangerous substances that are carried. Above all, they want the Home Department to get a move on. They want an end to the deplorable story of delay and ineffectiveness.
A chief fire officer writing to me a few weeks ago says:
The lack of any regulation dealing with these dangerous cargoes is an affront to the citizen, who looks to the legislature for protection. It is a crime against a fireman whose duty it is to deal with such substances whenever a mishap occurs.
He adds:
The Home Secretary has repeatedly promised that regulations would be made. I hope they will be made and introduced before there is a tragedy and not as a posthumous gesture to public opinion.
I can tell my hon. Friend that the fire service will study with great care what he has to say tonight.

11.36 p.m.

Sir Ronald Russell: I am glad that the hon. Gentleman has raised this subject. I only wish there was a better attendance of hon. Members because it is a most important topic. If a lack of international agreement is the cause of the delay, I hope that the Home Office will produce regulations without worrying about international agreements, because we need them here whatever difficulty there is in obtaining them abroad.
I hope that the anxiety about the future of the Explosives Department of the Home Office is not also the cause of the trouble. I understand that there is a move to transfer part of it to the Ministry of Transport. The Department seems to have worked very well while it has been under the Home Office, and I hope that it will be kept under the Home Department as a united body. I hope that the Under-Secretary will give


an assurance that that possible move, which I know is causing some anxiety, is not the cause of the delay in producing the regulations, which will be vitally important.

11.37 p.m.

The Under-Secretary of State for the Home Department (Mr. David Ennals): My hon. Friend is an expert on this subject, and his long association with the fire service gives him every right to bring it forward, and particularly to do so on behalf of the firemen with whom he has worked for so many years. I cannot rival him in his knowledge and expertise, but I assure him that I share his desire to see that everything possible is done to ensure the safe carriage by road of the many dangerous substances which are essential nowadays to our industrial effort.
I should first explain to the House, perhaps, that a number of legal controls exist already. The conveyance of explosives is already strictly controlled by regulations made under the Explosives Act, 1875. The main instrument of control for other substances is the Petroleum (Consolidation) Act, 1928, the provisions of which can be extended, by means of an Order in Council, to any substance. This control applies at present to petroleum spirit, petroleum mixtures, carbon disulphide and a few permanent gases when compressed into metal containers. The regulations under both Acts specify such matters as maximum loads, the manner in which the dangerous substances must be packed and loaded, and various other safety requirements. Apart from explosives, my hon. Friend mentioned inflammable materials. There is little doubt that the inflammable material carried on our roads in the greatest quantity is petroleum spirit, and, as I have explained, this, too, together with petroleum mixtures, is already strictly controlled.
In addition to petroleum spirit, many other inflammable liquids are carried by road, although the quantities are considerably less. But these, too, ought to be regulated. I shall speak of the delay in making appropriate regulations in a moment, but first I wish to remove the impression sometimes created—some of my hon. Friend's remarks may have given the impression—that just because there are no regulations dangerous substances are always being carried on our roads in

a highly dangerous state. This is not so. In the first place, there are the general requirements of the Motor Vehicles (Construction and Use) Regulations, 1963.
Then there are the precautions taken by industry itself. A considerable amount of research is constantly conducted by the chemical industry, on its own initiative, into safety in conveyance, and the Chemical Industries Association has recently issued a valuable code of guidance to its members on the safe conveyance by road of a great many substances. In consultation with us, moreover, the Association proposes to introduce a scheme of chemical information cards. These cards, carried by drivers, will describe in clear language and symbols the risk involved and the action to be taken in the event of an emergency on the roads. They will serve not only to assist in vehicle care but also the emergency services.
There will always be a few whose less responsible attitude may endanger others, and we have no doubt that regulations are needed, if only to give statutory backing to some practices already adopted in industry as a whole. My hon. Friend mentioned delays in introducing appropriate regulations. I accept the timetable of delay to which he has drawn attention and understand his sense of frustration and that of the firemen on whose behalf he speaks.
I do not want to go into the history of this matter. He wants to know what we are going to do rather than the causes of difficulty. I assure him that I accept the urgency of the task, and I will tell him our programme. There is no need for him or his friends in the fire service to despair.
In 1965, the Standing Advisory Committee on Dangerous Substances was set up with comprehensive terms of reference and a balanced and representative membership covering central and local Government and industry. The Committee's function is to advise the Home Secretary on the control of dangerous substances, with particular reference to their storage and carriage by road. In practice, the bulk of the Committee's work is carried out in technical sub-committees, whose meetings are attended by the best available experts in the United Kingdom. There are four at present dealing, respectively, with the packaging and labeling


of dangerous substances carried by road; the operation of vehicles carrying such loads; the construction of the vehicles concerned; and problems connected with the storage of petroleum spirit and related products.
The Committee decided at its first meeting towards the end of 1965 to give priority to proposals for regulations dealing with four classes of dangerous substances—inflammable liquids, corrosives, poisons and organic peroxides. The regulations, apart from certain basic safety requirements, will be confined in the first instance to the marking of vehicles and packages. This is the most pressing need, because the emergency services need to know at once what kind of dangerous substances are being carried on vehicles which may be involved in an accident. The first set of regulations dealing with over 200 inflammable liquids is almost ready and will be laid before Parliament very soon—in April, I hope.
The preparation of these regulations has taken many months, partly because of the technical difficulties involved in identifying the many substances concerned, and partly because of the protracted negotiations with industry which were necessary so as to resovle the practical difficulties created for it by the terms of the new regulations. It is clearly essential to work in close co-operation with industry, because unduly restrictive regulations would not only increase production and marketing costs but would put the United Kingdom at a disadvantage in international markets.
The need to reach the right balance between the requirements of safety and commercial advantage tend, in practice, to produce many problems. As a result of the experience we have gained, we hope that regulations for the other priority classes I have mentioned will follow more quickly. A considerable amount of spadework has been done on regulations dealing with the labelling of other dangerous substances, namely, corrosives and organic peroxides, during conveyance, and I hope that these will be ready by the end of the year. I hesitate to make any prediction at present about the making of regulations for the labelling of poisons—the other class to which the Committee decided to give

priority—if only because there is a limit to the amount of work which can be handled simultaneously.
Once the Committee can turn its attention to poisons, I do not expect the preparation of regulations to take very long. It should not be forgotten that the Poisons Rules, 1966, already provide safeguards for the conveyance of listed poisons relating to packaging and labelling. A number of other tasks still await the Committee's attention—for example, packaging, mixed loading and operation and construction of vehicles, although work on the last of these has already begun. The Committee's future programme is very full in respect of the priority classes alone. One other major class remains to be tackled—compressed and liquefied gases. This is a matter to which we shall turn our attention as soon as the Home Office Gas Cylinders and Containers Committee has presented its report. My right hon. Friend expects to receive this report in April.
International negotiations have long been going on in this whole field. These have resulted in the European Agreement on the International Carriage of Dangerous Goods by Road, to which the United Kingdom is a signatory. Attached to the Agreement, which came into force towards the end of last month, are very full technical annexes relating to goods and vehicles and comprising a detailed and comprehensive safety code covering a wide range of dangerous substances. In view of the growing volume of road traffic which crosses international frontiers, it is clearly desirable that domestic regulations should be in accordance with the provisions of these technical annexes, and this has been done as far as is acceptable in the United Kingdom. The United Kingdom throughout has been closely involved in these international negotiations and has strongly influenced the final form of the Agreement.
The hon. Member for Wembley, South (Sir R. Russell) referred to his concern about the staffing in the Explosives Branch. I can assure him that this is under review. In any case, there has been some slight increase in the staff of the Explosives Branch. This has not been one of the reasons for the delay in bringing forward the regulations to which I have already made reference.


The question whether part of this responsibility should pass to the Ministry of Transport is being examined at the present time and certainly no decision has been taken on this point. It is being looked at between Departments.
To sum up, explosives, petroleum and some other dangerous substances, when conveyed by road, are already subject to strict control. By April, I hope that over 20C, inflammable liquids will be added to the list of substances controlled, and by December about 135 corrosives and 40 organic peroxides.

Mr. Homer: Is it intended that the inflammable liquids shall be controlled in a manner similar to that applying to petroleum spirit?

Mr. Ennals: I cannot at the moment indicate the precise nature of the control, but, as I said, the regulations themselves will be coming forward in April and my hon. Friend will have an opportunity of seeing them then.
As I said, by December we hope to have about 135 corrosives and 40 organic peroxides controlled by regulations. If we can achieve these targets, we shall go a long way towards meeting the immediate requirements of the emergency services—fire, police and ambulance—as well as others whose business is the safe conveyance of dangerous substances by road.
I assure my hon. Friend that 1 share his sense of urgency in this task. My right hon. Friend the Home Secretary has set a programme of work, accepting as he does that this is a matter of urgency, and it is a matter which has been too long delayed. Matters are well in hand and I think my hon. Friend will be satisfied with the progress report when it comes forward.

Question put and agreed to.

Adjourned accordingly at twelve minutes to Twelve o'clock.